Every adult needs to have an estate plan. Estate planning isn’t just for the wealthy, it is for anyone who wants to make sure that their heirs receive what they want, when they want, and at the least cost, delay and inconvenience. With that being said, whether you are wealthy or just getting started, have young children or all of your children are grown and out of the house, at a minimum everyone should have the following documents place:
1. An Updated Will or Trust. Wills are easy to create and are usually inexpensive. However, wills are only effective if they are administered through the Probate Court. Administering an estate through the Probate Court can be a costly and slow legal process. A trust usually involves more effort and cost to set up, but if set up properly, it can be used to avoid Probate. By avoiding Probate your family will save time and money when assets are being distributed to your heirs.
2. A Durable Power of Attorney. A General Durable Power of Attorney is intended to cover your financial matters in the event you cannot handle them yourself. The individual you appoint to make financial decisions for you is known as your “attorney-in-fact.” The Durable Power of Attorney is intended to avoid the necessity of an expensive and time-consuming court proceeding to have a guardian appointed in the event you becomes disabled and can no longer manage your own financial affairs.
3. Updated Beneficiary Designations & Asset Ownership. The beneficiary designations on your IRAs, 401(k)s, and life insurance need to be reviewed to ensure they are coordinated with your overall estate plan. Upon your death these assets will be distributed to the beneficiary you have listed and won’t be controlled by the terms of your will or trust. You will also want to review how your real estate and other assets are titled. If these assets are titled jointly with another individual who survives you, the real estate or bank account will usually pass to the surviving joint owner, and not by the terms of your updated will or trust.
4. Advanced Directives – Living Will & Healthcare Power of Attorney. The Durable Power of Attorney for Health Care and Living Will are designed to cover health care and life support. In a Durable Power of Attorney for Health Care you will name the individual you trust to make health care decisions on your behalf in the event you are unable to make those decisions yourself. In the Living Will you will set forth your preferences concerning life prolonging treatment. Paul Kellogg is a lawyer with Phillips Law Firm, Inc., whose practice focuses on estate planning, probate and representing entrepreneurs and business owners. He can be reached at (513) 985-2500.