Estate Planning

The LawGives Estate Planning Guide provides key information about living wills, trusts, power of attorney, medical directives, and retirement accounts and life insurance policies.


Estate Planning: an introduction

LawGives understands that estate planning can be a daunting task. We’ve put together this handy guide to help you navigate the process.


Who needs an estate plan?

Everyone can benefit from estate planning. This is because your estate plan is more than just a list of who you want to give your property to. The plan includes additional documents such as a power of attorney, which gives someone the authority to make decisions on your behalf, and a medical directives guide, which outlines your wishes for your medical care if you are unable to make those decisions yourself.


Estate Planning Pieces



Current Will

A will is a set of instructions that lists what will happen to your property once you die, names a guardian for your children and for your children’s property, how your debts and taxes will be paid, and what will happen to your pets.

Almost every state has the same basic requirements to create a valid will:

  • Capacity. You must have the capacity to make a will and be of “sound mind.” This means that when writing the will you must know what property you own and what it means to leave that property to someone once you die.
  • Creation. You must draft a document (your will) that lists who will inherit your property.
  • Signature. You must sign the document.
  • Witnesses. You must have the document signed by at least 2 witnesses.

Trust

A trust is a legal entity that you can place your assets into. Creating a trust gives you more control over your assets because you get to design the rules of the trust. You decide how, when, and where the assets in the trust are distributed to a heir or beneficiary.

There are several benefits to setting up a trust. First, the assets in the trust do not need to be probated. If you establish a revocable living trust that terminates when you die, the assets in the trust will pass immediately to the beneficiaries. This saves your beneficiaries time and money. Other benefits include tax advantages for the creator of the trust and the beneficiaries, privacy from the public probate process, and the continuing effectiveness of a trust even if the creator dies or is incapacitated.

Probate is the legal process that takes place after someone dies. It includes proving to the Court that the deceased’s will is valid, identifying and inventorying the deceased’s property, having the property appraised, paying the deceased’s outstanding debts and taxes, and distributing the remaining property as the will (or state law, if there is no will) directs. Probate can take anywhere from 1-3 years, depending on your state’s laws.


Power of Attorney

A power of attorney allows you to choose a person to act in your place, usually to make financial decisions, if and when you become incapacitated. Without a valid power of attorney in place, no one can make financial decisions on your behalf until the Court appoints a conservator. The court process takes time, costs money, and there is no guarantee that the judge will choose the conservator that you would prefer.


Medical Power of Attorney

A medical power of attorney allows you to choose a person to make health-care decisions on your behalf, if and when you become incapacitated. Your medical power of attorney can be the same as your basic power of attorney, or you can choose someone different. You can modify or restrict this individual’s power over decisions about your life support or when to terminate care.


Medical Directives

Medical Directives include a living will and broader medical instructions. The living will instructs your health-care provider on when to to withdraw life support if you are terminally ill or in a vegetative state. The broader medical instructions give your health-care provider direction if you are in a less serious state of health, but are unable to make decisions for yourself.


Retirement Accounts and Life Insurance Policies

Your estate plan should make a list of your retirement accounts and life insurance policies. (Ex: IRA, 401(k)). These accounts and policies require you to choose a person as your “beneficiary designation.” When you die, the account and/or policy will automatically pass via contract to this person. It is important to note that the beneficiary designation will override your will. This means that if your mom is listed as the official beneficiary designation of your 401(k) but your spouse is listed as the inheritor of your 401(k) in your will, the 401(k) will automatically pass to your mom.