Estate planning is an essential process that can help ensure your personal, financial, and healthcare wishes are honored and your loved ones are cared for after your passing or if you become incapacitated. A comprehensive estate plan requires more than just a will. It is important to meet with an estate planning attorney to help guide the appropriate structure and documents for your circumstances. It is also important to note that each state has different laws. While more complex situations will require additional planning, below are some of the more common estate planning documents to consider:
- Last Will and Testament (Will): This legal document will govern the distribution of any assets in your name that do not pass outside of probate court, such as through a trust, beneficiary designation, transfer/payable on death designation, or survivorship designation. A will has to be admitted to probate, which is a court-supervised process to distribute your estate that can be time consuming and expensive. Probate property will also become subject to public record. Even if you have a trust (detailed below), a will can serve as a safety net by causing assets in your name to be distributed into the trust after death, albeit the preference is to title assets to the trust prior to death. It can also designate your preference for the guardian of minor children. Without a will, state law dictates how your assets are divided, which may not align with your wishes.
- Revocable Living Trust (Trust): A trust allows you to transfer assets into its ownership, managed by a trustee for the benefit of your named beneficiaries. During your life, you and the revocable trust are treated the same. You can title assets to the trust, remove assets from the trust, or change/terminate the trust at any time prior to your death. When you pass, your trust typically becomes irrevocable, and the designated successor trustee will manage and distribute the assets according to your wishes detailed in the document. All assets that were titled to the trust prior to death will be distributed outside of probate court. While probate court will distribute assets directly to a beneficiary shortly after your death, a trust will allow you to distribute assets to a beneficiary over a period of years. This may be particularly helpful if you have minor children or want to control how assets are used or distributed.
- Durable Power of Attorney (POA): This allows you to appoint someone to make financial, legal, and tax decisions on your behalf while you are alive. The power is effective immediately and continues if you become incapacitated, allowing your selected agent to manage your assets the same as if they were you until the time of your death. It is important to select this person carefully.
- Healthcare Power of Attorney (HPOA): This document designates someone to make healthcare (often life support) decisions for you if you are unable to do so yourself.
- Advance Healthcare Directive (Living Will): This non-binding statement of intent outlines your wishes regarding medical treatment and end-of-life care, ensuring your preferences are followed even if you cannot communicate them.
A comprehensive estate plan can provide peace of mind at every stage of your life. Individual circumstances may justify more advanced planning involving gifting strategies, irrevocable trusts, or charitable trusts. Having key documents in place can help secure your assets, safeguard your loved ones, and honor your wishes.
How often should the plan be reviewed?
Once you have an estate plan established, it is important to review the plan if you have had any significant life events, including marriage, divorce, birth of a child, death of beneficiaries, relocation, or major changes to your financial situation. You should also periodically re-evaluate whether named executors, trustees, and agents who have been granted power of attorney are still the best choice to serve in these roles for years into the future.
Should you have any questions related to your estate plan, please do not hesitate to reach out to your team at EBS to discuss. We can work with you and your estate planning attorney to make sure it is aligned with your goals and the needs of those who rely on you. If changes are appropriate, we will help guide you through the process.
This content is for informational purposes only and does not constitute financial, tax, or legal advice. Please consult with qualified professionals for personalized advice regarding your specific situation.