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Estate Planning - Not Just for the Rich
Planning Helps Eliminate Potential Conflicts
Everyone, no matter how much money is involved, needs an estate plan to ensure his family and financial goals are met after death. An estate plan defines how and by whom personal care will be managed, how health care decisions will be made, who will receive any assets after a death and who should manage the estate, pay any last debts and handle the distribution of assets.
Without an estate plan in place, a probate judge will appoint someone to handle an individual's assets and personal care. All assets will be distributed to any heirs according to a set of rules known as intestate succession. An estate plan ensures that assets go to the people you want, in the way you want and when you want. It permits you to save as much as possible on taxes, court costs and attorneys' fees. An estate plan also allows loved ones to mourn without being burdened with unnecessary red tape and financial confusion.
Estate planning is a process that involves more than just writing a will. All estate plans should include a durable power of attorney, in which an individual appoints an agent to handle his affairs in a variety of situations, including financial and health care matters. A durable power of attorney ensures the appointed agent will handle all matters if the individual becomes incapacitated and unable to do so.
A "letter of instructions" is an informal document that gives family and other survivors information concerning important financial and personal matters. It is not a substitute for a will, but it does clarify any special requests and provides essential information, such as the location of important papers (e.g., will, birth and marriage certificates, military records), the location of any safe-deposit boxes and their keys, any funeral and burial preferences or any advance arrangements that have been made, and the contact information for people who should be notified.
In addition, more Americans are using trusts to avoid probate and to manage their estates both during their lives and after they are gone. In a trust, one person or an institution, called a "trustee," holds legal title to property for another person, called a "beneficiary." The rules or instructions under which the trustee operates are set out in the trust documentation. Trusts may be used to protect property from creditors or to help the donor qualify for Medicaid.
Any complete estate plan should include medical directives, such as a health care proxy, a durable power of attorney for health care, a living will and medical instructions. The exact document or documents will depend on the choices you make.
A qualified lawyer can help create an estate plan and offer advice on such issues as taxes, title to assets and estate management. The National Academy of Elder Law Attorneys, Inc., a non-profit association that represents lawyers, bar organizations and others who work with older clients and their families, has a searchable directory of elder law attorneys on its Web site. Local senior services agencies also may be able to make referrals.
Most of all, estate planning involves people - family and friends. Discussing estate plans with future heirs can prevent disputes and confusion during an already emotional time.