Estate Plan 101
Updated: Nov 7, 2020
Estate Plan 101
The last thing someone wants to think about is his or her mortality. I mean who wants to think about dying? Most of our lives are focused on obtaining an education, getting a great job, and/or having and raising a family. Unfortunately, there are few certainties: birth, taxes, and death. A lot of people plan for their financial futures. They participate in 401ks, IRAs, life insurance policies, and defined benefit plans. Yet while working tirelessly to obtain assets to retire and create a legacy we fail to protect those assets and plan for the future.
Why an Estate Plan?
Numerous studies show over 50% of Americans do not have an estate plan, will, or medical directives. I recently read an article, which stated only 30% of adult Americans have a valid will. Clients will often ask me “why an estate plan?” Hundreds of articles are written on the subject. In my opinion its all about control. Control over where your assets will go and who will care for your minor or disabled children. Without an estate plan you end up leaving your entire estate to the whims of default state statutes called Intestacy Laws and the dictates of judges. No one intentionally does this, but millions fail to appropriately care for their estate. In my opinion, failing to make these decisions is irresponsible.
Let me share a personal story . . .
In January this year, I was preparing for the day, like most every other day. On my way to work that morning the local news station reported on a man who was shot and killed in my community. My immediate reaction was “this is terrible, I can’t imagine what this man’s family is going through.” As I made my way to the office, however, my mind turned from the story to the many tasks of the day.
An hour later I received a call from a longterm client. My client informed me that the individual shot that morning was his former business partner, Mark, another long term client. I sat there in shock as he gave me the details. Mark, my client was dead at 32 years of age leaving behind a wife and two small children.
While still on the phone, I received another call. I switched calls to discover it was Mark’s wife. Through a shaky voice she asked “Greg, I know you have represented Mark for years, please tell me you have a copy of his estate plan. Please tell me you two got together and drafted one.” I sat there listening to her words and my stomach dropped. I had represented Mark for years. We completed dozens of contracts, licensing issues, business organizations, and asset protection schemes. We had never discussed an estate plan. I felt sick. We never did.
I listened as Mark’s wife explained how she was having problems accessing bank accounts, cars, and their house information because everything was in his name. I speak to prospective clients all of the time about setting up an estate plan, and the most common answer is “I know I should. I really want to, but I just want to wait a few months.” There is always a big “but.” The problem is a few months turn into years, and then something unexpected happens and all of a sudden it’s too late. At that point, the problem is beyond an easy solution, and becomes very expensive to solve. The old adage applies, an ounce of prevention is worth a pound of cure.
What is An Estate Plan?
So What is an estate plan? An estate plan typically includes four (4) main documents: a Trust; Wills (for each of you); a living Will; and a Health Care Directive/Power of Attorney.
A Living or Inter Vivos Trust is an instrument which allows individuals to avoid the cost and expense of probate. Trusts are living documents in as much as they can be changed during your life time. Once you die, however, the trust becomes “irrevocable” requiring your successor trustees and beneficiaries to follow your desires. Trusts are also private documents, meaning you do not need the court or attorney’s to administer.
A Will or Testament is the oldest established means for transferring property. A Will allows you to designate beneficiaries and Administers. This allows you to avoid default laws termed Intestacy. For our purposes we will draft your Will to include your personal assets, these assets will then “pour” into the Trust in the case of your death.
A living will is an important health directive. The document identifies to the world your desires in case of a life or death situation where artificial life support is needed. Without a Living Will your friends and relatives may fight amongst themselves as to whether or not to terminate your life support.
Health Care Directive/Power of Attorney
As we age, a good portion of our country is diagnosed with illnesses which may eventually rob them of their capacity to care for themselves. Because the Trust only comes into play when a person dies, individuals may need a temporary guardian who can access their medical and financial records for the duration of their lives. This necessitates a Health Care Directive or Power of Attorney. The Power of Attorney will assist individuals in filing taxes, access medical records, sell jointly owned property, and obtain government assistance.
How do I Complete An Estate Plan?
Individuals often become overwhelmed in this process. This is where our firm comes into play. Regardless of your jurisdiction, we have a network of attorney’s who are licensed to assist you to establish a personalized estate plan containing all of the documents listed above. The process is easy. It entails you filling out a worksheet which goes through your estate and outlines your desires. Then with the assistance of an attorney you will complete your desires regarding your estate, and they will send you a draft to review. The attorney will review the draft with you and make any appropriate changes. When the changes are made a final version will be mailed to your home, with instructions, and tabs where to execute.
After the trust is signed, our firm will help you transfer assets into the estate. This process is called “funding” your trust. Guardian Law has a checklist we go through with you to ensure all of your assets are included in the Trust to ensure you will avoid probate. Upon completion of your estate plan we will send you all of the documents in a binder tabbed and ready for your execution.
Again, the process is simple and thorough. In the matter of a few weeks, and a few hours of your time, the entire plan is completed and funded.