Estate Planning: Wills And Advanced Directives, When Do I Need These?


Estate Planning: Wills And Advanced Directives, When Do I Need These?

Estate planning is just as it says – it’s a plan to ensure that your wishes are implemented – how you want your estate to be divided, who should be guardian to your minor children, and your assets are protected from tax implications and Medicaid. Your home, your car, your collectibles, your money, anything you want to ensure is passed on to the right people after you pass. Sure, it’s a morbid thought, but these are important matters and the implications are a lot scarier than not having a plan.

Everyone knows they should have a last will and testament. But there are other ways to protect yourself and your assets. I have previously discussed getting your advanced directives in order. In case you forgot, this includes a living will, power of attorney and health care proxy. A living will allows you to make decisions on your care in the event you are in a medical situation with no hope of survival. Your wishes are in black and white. This will put you and your family members at ease, knowing there is a specific plan in place. 

A health care proxy allows your proxy to make decisions about your medical care if you are unable to communicate. A power of attorney allows your agent to act on your behalf while you are alive – speak with your insurance company, transfer money or other assets, pay bills, etc. Let’s say you travel internationally on a consistent basis and can’t just jump on a plane back to the States at a moment’s notice. You might want to appoint someone who could be available in your absence to sign documents. You can limit your agent to specific duties or make the power of attorney as broad as you want.

Preparation takes the worry away. We don’t know when or if we will ever need a living will, health care proxy or power of attorney in place, but having one brings peace of mind and doesn’t put a burden on your family in the case of something happening and them having to make blind decisions. 

A last will and testament is a bit more complex. This document is used after you pass and allows you to determine such matters as guardianship of minor children, charitable donations, inheritances of personal property (you know, that Corvette that you wanted your niece to get), homes or money, etc. In your will, you appoint an executor, someone whom you trust, to carry out the distribution of your assets. If you do not have a will, someone with an interest in your estate, not necessarily the person you want, will be appointed by the probate court, and your assets get distributed according to the law – usually spouse and kids get everything and your niece won’t get that Corvette. No spouse – just minor kids? In that case, without a will, the Court may appoint someone to act as a guardian, but not necessarily the person of your choosing. And, a will has to be executed in a certain manner, with witnesses and affidavits, in order for it to be valid. A will can also contain various forms of a trust – from a trust for an underage beneficiary to a trust for the benefit of any companion animal you may have in your care at the time of your passing. 

Generally, an inter vivos trust, or living trust is just what it sounds like, a document you create while still living. A trust can be revocable or irrevocable and is often used as a vehicle to avoid probate since there is no estate to pass in probate (presumably everything is in the trust), no need to file an estate proceeding in Surrogate’s Court. A trust is an invaluable tool when planning for Medicaid. As I mentioned previously, we will go into more detail into the different types of trusts available during the rest of the series.

Many people think they are covered with the forms the Internet provides. While this may work in some cases, every case is unique and should be part of a comprehensive estate plan. It is very important to make sure you work with an attorney in the creation and execution of these documents, as they may not be legally binding in your state.   

I’m happy to discuss all of the above with you if you want more information or are ready to begin or expand your estate planning process. We will review your assets and any prior estate planning documents you may have created to ensure everything is consistent and up-to-date.

Reach out anytime.