Estate planning is an important step everyone should consider taking after major life events. Proper estate planning can guide you through everything from medical treatment in the event of an accident to what happens when you pass away. The process can seem daunting and should not be done without the assistance of a trained attorney, but there are some common questions and misconceptions that can help you go into the process feeling more confident.
What Are the Main Estate Planning Documents?
The main estate planning documents are a Last Will & Testament, a Durable Power of Attorney, and a Living Will. A Last Will & Testament dictates who gets what property of yours when you pass
There are additional documents that can be helpful in creating an estate plan, including those that give direction regarding any pets and the disposition of your remains.
Can I Do Estate Planning on My Own?
I’m not just saying this because you’re on my website, but you should not do estate planning without the assistance of an attorney! While websites and packages available that provide templates for some of the relevant estate planning documents, these are often incomplete and likely not be suitable for your needs. Interpretation of Wills is very strict and mistakes from using an incomplete do-it-yourself resource may result in unintended consequences.
Is a Trust Right for Me?
Trusts are not for everyone and even if it is, like cars, there are many models designed for certain situations. You wouldn’t help your friend move in a Smart Car and you wouldn’t drive cross country in an F150 – the same is true with trusts. It is best to contact an attorney to discuss if creating one is the right choice for your estate plan.
One consideration that warrants a Revocable Living Trust is whether you own property in multiple states. The laws are such that your estate must go through probate in every state that you own real estate and that could be a nightmare for your executor. By putting the property in a Revocable Living Trust, you essentially turn your Florida or George property into Pennsylvania property by retitling the deed. There is no transfer tax as a result of the transfer and this type of trust does not impact how you file your taxes.
What Happens When I Die?
Upon your death, your estate must go through the probate process. If you did not have a Last Will and Testament, your estate is considered intestate and will be divided up and distributed according to pre-existing rules. Someone must be appointed the administrator of your estate, and they will be responsible for filing all the relevant documents and ultimately distributing any assets in accordance with the rules. Intestacy does not require the consideration of your wishes.
If you have a Last Will and Testament, then you will have chosen your Executor. They will have the same responsibilities as an Administrator, but they will be able to rely on your directions and wishes as described in your Will. If you do not provide for something in your Last Will and Testament, then intestacy rules apply. Having a Last Will and Testament means you decide how you want things to go when you pass away.
Misconception: My Spouse automatically gets everything
Not necessarily. Your spouse will receive a portion of your estate, but how much depends on state law. Many states limit the amount your spouse can receive if you have children, and especially if you have children from a previous relationship. Should your spouse precede you in death, or you both pass away together, the distribution of assets necessarily changes.
Misconception: If my family knows what I want to happen, I don’t need documents.
Unfortunately, no. Without an estate plan in place, you cannot guarantee your family will follow your wishes. Even if they wish to, they may not be allowed. If you die without a Last Will and Testament, the intestacy laws of your state determine how your assets can be distributed. Your family cannot get around those laws. With regard to healthcare treatment, without a Living Will, your family is not bound to follow your instructions. Having a family member in the hospital may raise fears and emotions which cause your family to consider their interests rather than yours. Having an estate plan is the surest way to ensure your wishes are known and followed.
Misconception: I only need to prepare an estate plan once.
Probably not. Doing your estate plan is a big deal and an important step, but it is equally important to regularly update the plan. Life events may change your choices. Some common life events that should spur your review include, but are not limited to, marriage or divorce, the birth of children, and purchase or sale of a home. It is a good idea to review your estate plan every five to ten years anyway, even if you do not feel a significant life event has occurred.
Estate planning is a vitally important process that can seem overwhelming. With the right assistance, it can be a painless process that provides you with satisfaction and relief that your loved ones are cared for. Having this knowledge will help put you at ease and while these questions will not be the only ones you have, you will at least be more informed during the estate planning process making it significantly less daunting.