Essential Estate Planning Documents
The basics….
- Durable Power of Attorney (POA) for Financial Matters
- Health Care POA (and/or a Living Will)
- Will
The advanced….
- Trust structure & Agreement (depending on your specific situation)
Durable Power of Attorney (POA)
This document allows you to authorize an agent to handle your financial matters if you become incapacitated. Without a durable POA, your family members would need to initiate legal proceedings to have a court appoint a guardian to carry out these responsibilities. By planning for the possibility of incapacity through a durable POA, you can avoid the expense and hassle of court-appointed guardianship. This document is a must.
Health Care Documents
A health care POA authorizes an agent to handle your health care needs in accordance with your intentions if you become incapacitated. This includes making decisions about life support, nutrition, and hydration, as well as other general health care decisions. Everyone, regardless of age, should have a health care POA.
In addition to a health care POA, some states recognize a secondary document called a living will. It works with the health care POA to authorize specific actions if there is no reasonable hope of recovery. It is crucial when the agent or others named in your health care POA cannot make decisions about life-sustaining treatment.
Will
A will directs who will receive your property upon your death and under what circumstances. It also allows you to direct the payment of estate administration expenses and taxes and to nominate an executor to handle these matters.
Importantly, it enables you to designate a guardian for your minor children.
Trust
A trust helps manage assets during your life, if you become incapacitated, and upon your death. It can also minimize potential federal or state estate taxes. Trusts come in two general forms: testamentary trusts, funded at death, and living trusts, funded during your lifetime. Generally revocable, a living trust is the centerpiece of a well-rounded estate plan, allowing asset distribution without probate court jurisdiction and oversight. People can have one or more trusts depending on their financial situation, each with its own benefits while living or deceased. Numerous advanced planning opportunities exist using trusts including access and distribution potential later in life.
As death and estate taxes continue to rise, using living trusts will become increasingly popular as an effective means to protect your loved ones' inheritance from substantial tax burdens.
Estate Planning Benefits
A well-thought-out estate plan can:
- Provide financial security for your family.
- Ensure your property is preserved and passed on to beneficiaries.
- Mitigate or avoid disputes among family members.
- Minimize estate taxes and other administrative costs.
- Ensure competent management of your property in case of incapacity.
- Enable you to provide for a favorite charity.
- Establish a “break glass” strategy for the future should things not go as planned.
Other Considerations
A will governs only probate property; a trust governs only assets owned by the trust. Some assets pass outside of probate through beneficiary designations or how the title is held. It is important to review the ownership and beneficiary designations of these assets to ensure they are distributed according to your wishes. These assets include:
- Jointly held property
- Life insurance proceeds
- Retirement benefits
- Employee death benefits
- Retirement plan proceeds
Conclusion
Not all estate planning components may apply to everyone. Looking ahead, estate planning affords potential for those who take advantage of the opportunities that currently exist. In the next few writings, we will do a deeper dive into specific ideas and thoughts you many find helpful. As with most things, time and planning yield the best outcome. Please feel free to reach out if you have any questions and we would be happy to give you our opinion or connect you with one of the many estate attorneys we routinely work with.
Thanks
Frank
Frank, Ed, & Tammy
Retirement Capital Advisors
800 Battery Ave SE
The Battery, Suite 100
Atlanta, GA 30339
Office- 412-722-3795
Securities and Advisory Services offered through Commonwealth Financial Network®, member FINRA/ SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network
This writing is for the clients of Retirement Capital Advisors only and not for general circulation. It is for educational and informational purposes only. This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.