Estate Planning – Is it for me?

A recent survey by caring.com indicated that less than 1/3 of Americans have some form of estate plan in place.  When asked why, a common response was that they simply didn’t believe they had enough assets to need an estate plan.  The reality is that almost every adult has an “estate” and should have a plan in place should something happen to them such as death or incapacitation.  In a nutshell, if you own real property (even if there is still a mortgage) and have children, you should have an estate plan in place.

But where does one start?  Estate planning can seem like a daunting process for many people and it’s hard to know what you need, why you need it, and where is the best place to go to get it done.  For most people, a standard “trust-based” estate plan is a great way to ensure that your assets will be properly and efficiently distributed to your loved ones.

Trust-Based Estate Plan

A trust-based estate plan consists of the following:

1.  A revocable living trust.  A revocable living trust is a legal entity that holds title to property and assets to be managed during an individual’s lifetime.  A husband and wife can form a joint revocable living trust.  During their lifetime, they typically will serve as trustees of their trust and have full power and authority over the assets held in the trust.  A successor trustee is also named in a trust and given instructions regarding how the assets of the trust should be distributed to named beneficiaries.
2. Will.  A will is a legal document that takes effect only upon someone’s death.  When used in an trust based estate plan, a will works in conjunction with the trust and ensures that all personal property (furniture, vehicles, family heirlooms, etc.) funnel into the trust upon the individual’s passing and get distributed pursuant to the instructions set forth in the trust.  A will also allows parents to appoint guardians over their minor children should something happen to both parents.
3. General Power of Attorney.  A power of attorney  is a legally binding document that allows an individual to appoint someone to manage their property, medical, or financial affairs in the event that they become physically or mentally unable to do so themselves.
4. Medical Power of Attorney.  A medical power of attorney is a legally binding document that allows an individual to appoint someone to make medical decisions on their behalf, in the event that they are unable to do so themselves.  It also allows the individual to have access to medical history and records, health insurance information, physician information and any other information that would assist them in making educated decisions regarding your health care.
5. Medical Directive/Living Will.  A medical directive or living will is a document that provides instructions to family members and physicians regarding an individual’s desires for the specific type of medical treatment one wishes to receive, or not receive, if that individual is no longer able to make medical decisions because of a terminal condition or being permanently unconscious.