“Planning is bringing the future into the present so that you can do something about it now.”
-Alan Lakein
Estate Planning manages your financial and personal affairs during your lifetime and distributes your wealth after you are gone. It ensures that your possessions go to the heirs you choose.
These are five common components to a good estate plan:
Will - The cornerstone of the estate planning process. It will name the executor to oversee the distribution of the estate. It can pinpoint the guardian for minor children, spell out how assets are divided, and go through probate. A will provides control over your legacy, is straightforward to create, and can be changed during your lifetime.
Power of Attorney - A document authorizing someone to handle legal and financial decisions when you become incapacitated. The person you designate is known as your agent. General powers give the agent authority to conduct any business. Specific or limited power of attorney is for particular transactions. Without a designated power of attorney, a court will select someone to serve.
Living Will - Provides specific instructions about your medical care if you become incapacitated or terminally ill.
Health Care Proxy - Identifies a person who will make medical decisions on your behalf if you become incapacitated. Often family members will disagree about what steps should be taken in your care. Therefore, it is essential to have a health care directive in place to carry out your wishes.
Trust - A legal entity that can own property, avoid probate, and maintain privacy. A trust provides effective management of your assets and distributions to heirs. In special needs cases, it can be particularly important. Government programs such as Supplemental Security Income (SSI) and Medicaid have low-asset thresholds for qualification but require proper planning for asset distribution at death. Special needs trusts provide the structure to fund a child’s care without disqualifying them from government assistance. Using a trust involves a complex set of tax rules and regulations. Working with an attorney who understands these rules and regulations is essential.
Lastly, a careful review of beneficiary designations and the location of essential documents is often overlooked. Estate planning can seem overwhelming, but you do not have to do it alone. Working with qualified professionals can help you navigate the various facets of this challenge. Please do not hesitate to reach out for assistance.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss any specific tax issues with a qualified professional.
