Some documents on our website require Adobe Acrobat to view. You can Most people do not think of estate planning as something that they need to do. In fact, more than 70% of Americans do not have a simple Will. Estate planning is simply a matter of determining who will inherit your assets when you are gone. It also involves planning for incapacity, so that in the event of incapacity, there are documents in place that will ensure that your assets will be managed the way you would have done so, had you not been incapacitated.
The key documents in any estate plan are a Will, Health Care Proxy (with HIPAA Authorization and Release) and a Durable Power of Attorney. If one of your objectives is to avoid Probate and the cost of administering your estate, then a trust should also be considered.
Your Will directs how and to whom your property will be distributed when you are gone. You may indicate that specific gifts of property be made to specific individuals or to classes of individuals. For example, you could instruct that your household goods and furnishings be given to your nieces and nephews or to any one or two of them.
A Will is required to be submitted to the Probate Court in order to prove that it is valid. When the court determines its validity, it will then appoint whomever you have named as Personal Representative to manage and distribute the assets in the estate.
If a trust is part of your estate plan, there will oftentimes be no need to prove the validity of the Will if the trust is funded while you are living. “Funding” means that you have either re-titled your assets in the name of your trust, or have named your trust as a beneficiary of an asset, like an insurance policy, IRA, annuity or savings account. In general, a Trust is much easier to change or amend than a Will as it typically requires only your notarized signature, where the Will requires the signatures of two witnesses and a notarization.
Incapacity planning documents are also key elements to your estate plan. Most of us will end up going through some period of incapacity prior to our death. Only about 7 % of us will die in our sleep. The key documents in this case are the Health Care Proxy and Durable Power of Attorney. A Health Care Proxy allows you to name a Health Care Agent who will make health care decisions for you when you no longer can make your own. A Durable Power of Attorney authorizes your attorney-in-fact to handle your legal and financial affairs when you are no longer able to do so.
Everyone should have an estate plan. In the absence of one, you may find that the court has appointed someone to make health care decisions for you or to handle your assets. Your estate plan gives you a choice in this regard, rather than letting the court decide.