Wills and Estates
Estate Planning
We strongly recommend that you take the time to develop an estate plan.
Estate planning can be of great assistance to your loved ones, and is often
neither time consuming nor expensive.
There are several estate planning tools you can use make imporatnt decisions
now, while you are healthy, regarding what will happen to your assets, your
family, and to you, after you die or if a medical condition were to render
you incapacitated. Estate planning tools can also be used for tax planning.
A typical estate plan is comprised of four documents, each serving their
own specialized purpose; sometimes a fifth document, called a trust, is
also helpful.
- Wills
- Trusts
- Financial Power of Attorney
- Health Care Power of Attorney
- Declaration of a Natural Death (Living Will)
A Will is a legal document that allows you to plan what will happen to your assets, and who will care for your children, after your death.
Wills can be simple, boiler-plate documents or elaborate, custom drafted
manuals for the distribution of your assets. Will substitutes, including
revocable living trusts, irrevocable trusts, and family trusts, can be utilized
to affect your desires with greater control, manipulate tax exposure, and
more.
You can do anything you want with your assets in a Will so long as your
desires do not violate the law or public policy. As a practical matter,
most Wills look about the same. After all, most folks have similar basic
priorities for the disposition of their property and debts after they die.
Most people find that a reasonably simple, reasonably economical Will fits
the bill.
Clients frequently ask when is the appropriate time to execute or revise
a Will. There are no clear answers except one: Too early is better than
too late. Generally, it is a good idea to "get your affairs in order" or
have your Will reviewed if you are getting married, buying a house, or having
a child. Anytime there is a change to the makeup of your family, your plan
should be reviewed to determine whether the change affects your Will. It
is crucial to have your plan revised if you are getting a divorce. Coming
into a significant amount of money is another event that should trigger
a call to your estate planner.
Trusts
A revocable living trust is a legal document that can be used to transfer
your assets to a named trustee, along with specific instructions regarding
how to hold and use such assets both during your life and after your death.
You may add or remove assets or dissolve the trust at any time during your
life.
Everybody needs a will; but most individuals do not need a trust unless
they have a large estate. If your estate is large, or if you anticipate
that your estate will be large in the near future, you may want to consider
setting up a trust for tax planning purposes. Any individual may pass $3.5
million free of estate tax in 2009. However, the future of the estate tax
is quite unclear. The federal estate tax is scheduled to be repealed in
2010; but in 2011 an individual will be able to pass no more than $1 million
without paying the estate tax.
Financial Power of Attorney
Conceptually, powers of attorney are documents that grant authority to another
person to act on your behalf.
A Financial Power of Attorney grants authority to an agent to manage your
financial affairs if you are unable to do so. The agent is called your "attorney-in-fact."
As your representative, your attorney-in-fact can sign contracts, pay bills,
file taxes, sell property, and give gifts on your behalf.
Powers of attorney are effective until the death of the maker. Your attorney-in-fact
will not be able to do anything on your behalf after the moment of your
death. After death, all authority to conduct business on your behalf falls
to your estate's personal representative, whether that be the executor appointed
in your Will or an administrator appointed by the court in the absence of
a Will.
Health Care Power of Attorney
A Health Care Power of Attorney is a grant of authority to another person
to make health care decisions for you if you are unable to do so for yourself.
Determination of competence to make your own decisions can be an important
issue to consider. Oftentimes the maker of a Health Care Power of Attorney
will authorize his/her attending physician to make the determination. Once
the doctor says you are incapable of making your own decisions, your health
care attorney-in-fact will begin making decisions for you.
Living Will
A Living Will permits an individual to decide, in advance, whether (s)he
wants his/her life to be prolonged by specific medical procedures, such
as artifical hydration and nutrition, in the event that (s)he has an incurable
or irreversible condition that will result in death within a short period
of time, is unconscious and will not regain consciousness, and/or is suffering
from advanced dementia. A living will may spare family members from having
to make painful determinations regarding life prolonging measures for you.
Living wills also ensure assets are not wasted on hopeless efforts to prolong
the dying process, preserving the individual's estate for the benefit of
his/her beneficiaries.
Living wills can be custom drafted documents setting out specific procedures
authorized by the individual in the event of a terminal injury or illness.
More often, individuals use a simple form adopted by the legislature and
codified in the statutes. One advantage of using the statutory form is that
doctors, lawyers and judges are familiar with it and are more likely to
follow their standard procedure than if faced with a form that may require
interpretation of the individual's intent. Another advantage is the low
cost of reproducing the statutory form.
In 2005, national media coverage of Terri Schiavo, a Florida woman in a
persistent vegetative state, whose husband and parents disagreed regarding
whether she would have wanted to be kept alive with a feeding tube, had
the nation buzzing about the importance of living wills. After fifteen years
on a feeding tube, five federal law suits, and the involvement of state
and federal lawmakers, her life-prolonging feeding tube was removed.
Contact DeWitt Law for assistance with developing
an estate plan that suits your needs.