Gifts For Yourself and Your Family To Make Your and Their Lives Easier
At GWMC, we believe that estate planning involves both lifetime planning as well as arrangements that speak at death and possibly later. There are six and sometimes seven or more essential documents necessary for effective planning focused on clients’ objectives, and advancing and protecting their interests in an uncertain world. Each of these documents speak for you when you are unable either due to incapacity or death. The six bedrock documents are:
- A Durable Power of Attorney for Property and Finances – This allows you to manage and direct your financial affairs should you become unable to manage them yourself. By designating a trusted agent, you are assured that your assets are protected and used for your benefit, your income is collected, your investments are managed, and your taxes and bills are paid. This is a powerful tool to avoid the need for a court appointed conservator, in the event of your incapacity. Durable means this appointment of an agent is not revoked automatically in the case of your incapacity, as was the case under Common Law. In fact, many Durable Powers of Attorney only become effective when you become incapacitated. Until then, you alone manage your affairs.
- Healthcare Power of Attorney – What if you are unable to communicate with your health care providers or they determine that, although you can speak, you cannot evaluate health care options available to you? A Power of Attorney for Health Care Decisions authorizes your designated Attorney-in-Fact to make medical decisions for you when you cannot. In your Healthcare Power of Attorney, you can direct your agent to what medical procedures or options you allow and those you do not; e.g., experimental treatments, transfusions, etc.; and direct and authorize decisions concerning your placement in the event of incapacity. This usually avoids the need for an expensive and unnecessary judicial guardianship court proceeding.
- HIPAA Release – With this, you authorize release of your federal Protected Health Information to those persons whom you designate. Without this, your health care providers are not to disclose or discuss your health or care to anyone other than you. It is especially important to coordinate this with your Healthcare Power of Attorney, so your Attorney-in-Fact can obtain the necessary information to discuss your condition and health care options with health care providers in order to make informed decisions in accord with your wishes. Often, additional family members will be authorized to speak with your health care providers, so that all feel they have been kept informed, and no one is hiding anything.
- Advance Directive or Living Will – Here you inform your health care providers or surrogate of your end-of-life medical wishes. Your directions might range from “perform all heroic measures to maintain me” to “pull the plug.” Many times, these directions are based on religious beliefs or experiences with other family members. No matter the basis, it is a really good idea to give guidance and directions so that family members aren’t placed in potentially heart wrenching disputes and even potential litigation. It is important to say what you want now, while you can.
- A Will – This document disposes your estate assets after your death according to your wishes. It is often used in conjunction with a Revocable Trust and must be coordinated with assets that are subject to beneficiary designations or that are held in joint tenancy or certain other forms of ownership. In the event you fail to have a valid Will, the statutory laws of the state direct who receives your estate assets and in what amounts or percentages. Clients are often surprised to learn of these amounts or percentages and say, “Who would want that?” Also, failure to have a valid will can result in minors or incapacitated persons receiving current inheritances that result in the need for judicial conservatorships being established for them by the court and possibly resulting in an heir receiving a sizable inheritance at a much younger age than would have been desired.
- Beneficiary Designations – These are essential for pensions, 401(k) Plans, 403(b) Plans, IRAs, life insurance policies, and annuities. These designations override any provisions in a Will or a Trust. As a matter of contract, the retirement provider or insurance carrier must pay the beneficiary you have designated and in the amounts you have designated. It sometimes happens that a person fails to designate a beneficiary, or all designated beneficiaries predecease the person. In this case, depending on the contract’s boilerplate provisions, the benefit may be paid to the estate or to a surviving spouse, and the decedent’s creditors may be able to successfully reach the assets that would have otherwise been protected. Also, people sometimes fail to update beneficiary designations when circumstances or relationships change resulting in unintended windfalls and consequences. Unintended consequences are described in Don’t You Forget About Me which you can read here.
In addition to the six essential documents, a revocable trust is frequently used with affluent or high net worth clients. This is a document that speaks both during lifetime and after death. It supplements and coordinates with a Power of Attorney for Property and Finance and a Will. Like the Power of Attorney, it provides for management and security of assets and payments during the maker’s lifetime but usually allows the maker retain control of asset management until incapacity or death occurs. Thereafter, the assets are used for the benefit of the maker and after death assets are distributed when and how the maker specifies. To read more about Revocable Trusts, click here.
An important part of estate planning is determining what assets are owned, how they are owned, and how their disposition may be controlled. In addition to pensions, 401(k) Plans, 403(b) Plans, IRAs, life insurance policies, and annuities; lifetime and after death transfers of certain properties are not subject to control by a Will or trust. For example, joint tenancy ownership of real estate, bank accounts, and other assets, payable on death (POD) bank accounts and savings bonds, and transfer of death (TOD) financial accounts, titles, and deeds all pass at death to the designated joint owner or survivor, regardless of what your Will or trust provides. Like beneficiary designations, these transfers can result in unintended windfalls and consequences.
So too, divorce decrees, employment contracts, equity-based compensation plans, buy-sell agreements and corporate By-Laws and LLC Operating Agreements need to be reviewed carefully as part of estate planning.
Estate planning is not a one-time “set it and forget it” endeavor. People, circumstances, and tax laws change. The assets you have today are not the same as what you have a year from now. Estate planning is a recurring process that should be revisited no less than frequently than every three to five years and sooner if situations change.
We believe in people making informed and conscious choices. We help you to clarify your priorities and personal goals, to simplify the planning process, and help you control your legacy. We take pride in our communication, to ensure families understand and feel comfortable about their estate planning decisions. We address your needs and issues of family dynamics to ensure that your wishes are met now and in the future.
Peace of Mind Is Possible. Do This for Yourself and Your Family. Talk to the attorneys at GWMC, today. Call us at (402) 392-1500.
