Question: While I am familiar with Last Wills and Testaments, I keep hearing my friends talk about completing an “Estate Plan.” What is typically included in an “Estate Plan” and do I need one?
Answer: While people are aware of the importance of execute a Last Will & Testament, they are often of the mindset that it is something to be done as they get older and as a result it gets put off. For the same reason, the value of a establishing a comprehensive Estate Plan is often overlooked.
Regardless of your age, the creation of a thorough Estate Plan is essential. An Estate Plan ensures that your needs, your family’s needs, and financial goals are met during your lifetime and upon your death. A thorough and comprehensive plan should include a Last Will & Testament, Health Care Proxy, Living Will, and Power of Attorney. For some clients the creation of a Trust is also practical.
Again, age is not a factor in considering whether or not you should have an Estate Plan. It is especially important if you have minor children or disabled beneficiaries. Everybody needs an Estate Plan. Through the creation of a Last Will & Testament and/or a Trust you can establish how your assets will be distributed upon your death. You can ensure that the financial needs of your children or disabled beneficiaries are met after you pass away by establishing Trusts for their benefit. Also of great importance is your ability to memorialize your wishes with regard to who you want to serve as a Guardian for your minor children.
In addition to a Will and / or Trust, an Estate Plan would also include the creation of a Power of Attorney, through which you can designate someone to handle your financial matters in the event you become incapable of doing so. Without a crystal ball, it is difficult to determine when such a document will become necessary. Circumstances have arisen where a young client has suffered an unfortunate accident that left him unable to manage his own finances. Not having a Power of Attorney in place has necessitated a lengthy and costly Court proceeding for the appointment of a Guardian.
Another component of a comprehensive Estate Plan is the execution of advance directives regarding your health care, namely a Health Care Proxy and a Living Will. By creating a Health Care Proxy, you can designate a succession of individuals to make health care decisions on your behalf, if and only if, you are incapable of making them on your own. While such circumstances can arise as we get older, unexpected accidents or medical conditions make this document a critical part of an Estate Plan. A Living Will goes hand in hand with the Health Care Proxy. Through this document you can detail your wishes with regard to end of life care, particularly with regard to the provision or withholding of procedures such as cardio-pulmonary resuscitation, mechanical respiration, and artificial hydration and nutrition.
For those who have already established Estate Plans, it is crucial to review it regularly. Each stage of life brings with it different issues that should be reviewed in the context of your estate plan. You should also review your plan with your attorney whenever your family experiences a major life change. For example, you should revisit your plan upon the birth of a child, a divorce, the death of a spouse or child, a decline in health, retirement, or if you experience a significant change in your financial circumstances.
By implementing an Estate Plan now you can avoid bickering and confusion later. An Estate plan spells out to your family members and/or beneficiaries how you would want things handled were a crisis to arise or upon your death. Being clear about your intentions can not only prevent drawn out costly legal battles, but can keep harmony amongst your loved ones.