Estate Planning 101

[This post is Part Two in a series discussing estate planning. You can find links to the other posts in the series here.]

Estate Planning doesn’t need to be complicated and it certainly is not just for the wealthy. A well-crafted estate plan can help take the guess-work out of dividing your assets, helps avoid arguments or confusion within your family, and can provide protection for your children.

Additionally, estate planning is a critical piece in helping protect individuals as they age. Documents such as a power of attorney and a medical advance directive provide assistance to our loved ones in the event that we become unable to act on our own.

Key Features of an Estate Plan

  1. A Testamentary Will
    • A Will provides each client with the opportunity to specify who receives what. A Will is the place where you can give specific instructions on how your assets shall be distributed after your passing.
    • Want to ensure your children don’t just receive a lump-sum when they turn 18? Many parents set up a testamentary trust that distributes assets over time.
    • Have a certain non-profit that you would like to support? Your Will can provide for charitable bequests.
  1. Nomination of a Personal Representative
    • A Personal Representative is the individual tasked with settling your estate. The Personal Representative, sometimes known as an “executor” in other jurisdictions, is responsible for paying creditors and distributing assets. A Personal Representative may take a fee.
  1. Power of Attorney
    • A durable power of attorney gives someone else, known as the agent, authority to manage your financial assets. This document allows your agent to quickly act on your behalf.
    • A power of attorney can help eliminate the need to establish a guardianship or conservatorship through the courts if you become incapacitated.
    • A power of attorney ends upon the death of the principal and may be revoked during the principal’s lifetime.
  1. Medical Advance Directive and Healthcare Power of Attorney
    • An Advance Directive gives individuals an opportunity to provide instructions about the type of care they would like to receive in the event they become seriously ill and unable to speak for themselves.
    • Advance Directives are only used in the event an individual is unable to express their own decisions on medical treatment.
    • A Healthcare Power of Attorney allows you to nominate an individual to make decisions regarding your healthcare in the event you are unable to do so.
    • A Healthcare Power of Attorney is durable, which means that it is effective even if you become disabled, incapacitated, or incompetent.
  1. Beneficiary Deeds
    • A Beneficiary Deed allows an owner of real property to transfer the property to a beneficiary at the time of the owner’s death without having to open a probate.
    • Upon the death of the owner of the property, the beneficiary executes an Affidavit of Death and can take title to the real property without going through probate.
    • This type of deed can expedite the process of getting property to heirs after death.
  1. Letters of Instruction
    • Letters of Instructions serve as a “roadmap” for your personal representative in the event of your death.
    • It provides instructions and information on your assets. It helps guide your personal representative to the professionals familiar with your finances (i.e. your accountant) and ensures that your personal representative does not overlook any of your assets.
    • Letters of Instruction are also a helpful way to inform your family about your burial and funeral preferences.

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