The Value of an Estate Plan for You and Your Family

Estate planning can be an uncomfortable topic to think about. The topic, after all, includes thinking about one’s own mortality and the effect it may have on loved ones. The topic also covers difficult subjects such as a significant decline in physical or mental health that affects the ability to care for oneself or make decisions.

Although passing away and the inability to care for oneself or make decisions can be difficult to consider, the value of an estate plan outweighs the difficulty because a good plan can ease the burden on family members and caregivers during those difficult times. A good estate plan sets forth guidelines describing how to make financial and medical decisions if the person who made the plan is not able to make those decisions and how to distribute assets after the person’s passing.

For some high-wealth individuals or couples, an estate plan may include strategies for minimizing estate taxes or transferring complex business or investment interests, but for most people, the value of an estate plan primarily rests in the peace of mind gained from establishing a framework for loved ones, caregivers, and others to follow.

A Comprehensive Estate Plan and the Value Added by an Attorney

A comprehensive estate plan uses several legal documents to set forth a framework for loved ones and others if a person who made the plan cannot care for him- or herself, make decisions on financial or personal business matters, or has passed away. In a good estate plan, each document is customized to the needs of each individual or married couple, and, more importantly, the documents are structured in a way so they work together to achieve the individual’s or couple’s goals for their assets and for the support and care of the beneficiaries.

In the planning process, estate-planning attorneys add a great deal of value because they have the legal knowledge and skill to draft documents that fit the clients’ needs, achieve their long-term goals, and work together in an overall plan. The following paragraphs provide a brief overview of some of the most-common documents used in an estate plan.

Last Will and Testament

A last will and testament is a document signed by a “testator” that outlines how the testator’s property should be distributed to his or beneficiaries. A will also identifies one or more individuals who are named to act as the guardian(s) for the testator’s minor children. A will can name the testator’s trust as the beneficiary of the will. If, for some reason, an asset of the testator was not transferred to the trust before passing, the asset will be distributed to the trust during the probate process because the trust is the beneficiary.

Trusts

A trust is a specialized type of agreement between a person called the “trustor” (also known as the “grantor”) and a “trustee.” Under the agreement, the trustor transfers ownership of property to the trustee, and the trustee agrees to hold and manage the property for the benefit of beneficiaries named in the trust agreement. The trust document also gives instructions to the trustee on the transfer of property to the beneficiaries, which usually occurs after the trustor has passed away. Unlike a will, which must go through the probate process, a trust can be managed, and the trust assets can be passed to the beneficiaries, without a probate case (unless a dispute involving the trust arises). In estate planning, revocable living trusts are commonly used because they can be revoked at any time before the trustor passes away, or in the case of a married couple who were the trustors, before the first of the trustors passes.

Durable Powers of Attorney

Under a durable power of attorney, a person authorizes another person to act on his/her behalf in financial or business matters. For example, the person authorized to act, known as the agent, can sign transaction documents on behalf of the person who gave the authorization (the “principal”). The principal is legally bound by the action taken by the agent. Durable powers of attorney can take effect immediately on signing or take effect after the principal is incapacitated and not able to manage his or her affairs.

Healthcare Powers of Attorney

A healthcare power of attorney is a power of attorney that covers medical and healthcare decisions. Healthcare powers of attorney often become effective when signed, but the agent only steps in to make decisions if or when the principal is unable to make healthcare decisions.

Living Wills / Advance Directives

A living will is also known as an advance directive, and it provides instructions on whether and under what circumstances to follow “do not resuscitate” instructions.

Other Documents

Some other documents may also be necessary to implement the estate plan. For example, if the plan includes a trust, deeds will be necessary to transfer ownership of any real property to the trust. Another consideration is whether some assets can and should pass to a beneficiary through some sort of beneficiary designation. Common examples include insurance policies, investment accounts, and a beneficiary designation conveying title to a vehicle. These are sometimes called non-probate transfers because the beneficiary designation allows transfer to the beneficiary outside of the probate process.

Concluding Thoughts on the Value of an Estate Plan

For most individuals and couples, the main benefit of an estate plan is peace of mind. When an individual or couple establish an estate plan, they have stated their intentions as to how to make financial and medical decisions on their behalf and how to distribute their property after they have passed. Because the law governing wills, trusts, and powers of attorney seeks to uphold their intent, the individual or couple has assurance that loved ones, health providers, and caregivers will be obligated to abide by the guidelines and framework of the estate plan. Whether you are single or married, whether you do or do not have children, a solid estate plan is a responsible step that can minimize family conflict over difficult decisions and foster a sense of security that your intentions will be honored.

Each individual’s or couple’s estate planning needs and goals will vary, and a well-thought-out estate plan will be tailored to fit the needs and goals of the individual or couple. An estate-planning attorney brings value to this process because the attorney considers needs and goals of the of the client and has the knowledge and skill to prepare estate-planning documents suited to achieve the client's long-term goals. Endurance Business Law can assist with developing an appropriate estate plan for you. To set up a consultation, please call our office at (480) 997-2951 or use the Contact form on this website We may charge a consultation fee, but if we agree to prepare an estate plan for you, the consultation fee will be deducted from the fee for preparing the estate plan.