Fundamental Estate Planning

There are myriad legal strategies we might consider implementing as we design your estate plan. Regardless, there are a handful of “must have” estate planning documents that are the first steps in creating your estate plan:

Will.  A will is a legal document that describes your intentions for your estate when you pass away. Without a will, a person would die “intestate,” leaving the state to divide and distribute the estate to surviving family members based on their relationship to the deceased. No consideration is given under state law to how “close” such family members were to the decedent (or if they fought constantly). In many states, a will is required to appoint guardians (backup parents) in the event that minor children are orphaned. What could be more important than appointing the people you want to rear your children if you are not around?

Health Care Directive.  A health care directive, often called an “advance directive,” is a document you sign now to specify the type and extent of medical and personal care you would want if you were unable to make and communicate your own decisions. Everyone age 18 and older should file provide a copy to the appointed agents and a physician.

Power of Attorney.  This is a legal document giving another person — sometimes called “the attorney-in-fact” or “agent” — the legal authority to make decisions on business matters and other issues on your behalf. The exact scope of the power given is spelled out in the document itself. These powers cease when the maker passes away; they also may no longer be in effect when the maker becomes unable to make or communicate decisions. A “durable” power of attorney should be used in that situation, or a health care directive.

Trusts.  These come in all sorts of shapes and sizes. Generally speaking, a trust is a legal entity with at least three parties: the creator of the trust, the trustee, and the beneficiary. With most “revocable living trusts,” you are all three parties. Depending on your circumstances, there could be advantages to establishing a trust. The most common advantage is avoiding probate. This can help streamline administration of your estate upon your death, keeping your plans private in the process. Some irrevocable trusts may protect trust assets from creditors. For example, trusts established under a will or revocable living trust can protect the inheritance for loved ones from squandering, divorces, lawsuits and bankruptcies.

with at least three parties: the creator of the trust, the trustee, and the beneficiary. With most “revocable living trusts,” you are all three parties. Depending on your circumstances, there could be advantages to establishing a trust. The most common advantage is avoiding probate. This can help streamline administration of your estate upon your death, keeping your plans private in the process. Some irrevocable trusts may protect trust assets from creditors. For example, trusts established under a will or revocable living trust can protect the inheritance for loved ones from squandering, divorces, lawsuits and bankruptcies.