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.

Why Young Families Need Estate Planning

Life is busy for families with children. Between work and taking care of your children, other tasks on the to-do list can get put on the back burner. Tasks like estate planning can get sidelined for years, but it doesn’t have to be that way.

Do you know what would happen to your child if you and your spouse suddenly died? Have you nominated an individual to take care of your children’s daily needs in the event you and your spouse are unable to do so? Do you want someone to manage your assets until your child reaches adulthood or after they finish college?

Estate planning can help address these questions. A comprehensive estate plan can ensure that your family is protected and that your wishes are honored.

Why do young families need an estate plan?

Families with children should absolutely have an estate plan.  Even though it is not pleasant to contemplate your untimely death, it is critical for proper planning.

Estate planning for families generally involves:

  • Nomination of a guardian to care for your children.
    • Who is the trusted individual you would want to take care of your children? Are there relative you do not want raising your children?
  • Creation of a testamentary trust.
    • Want to ensure your children don’t just receive a lump-sum when they reach adulthood? Many parents set up a testamentary trust that explains how and when assets should be distributed to their children.
    • Many clients provide that their children receive assets upon the occurrence of specific events such as going to college or buying a home.
    • Other parents distribute their assets to children over time (e.g. one-third at 25, one-third at 30, one-third at 35.)
  • Power of Attorney
    • A durable power of attorney gives someone else, frequently your spouse, authority over your financial assets. This document allows your agent to quickly act on your behalf.
    • A power of attorney can save you the hassle of having to involve the court in the event you are unable to manage your assets.
  • Medical Advance Directive and Health Care Power of Attorney
    • None of us like to imagine that we will become so ill that we won’t be able to manage our own health decisions. However terrible or unlikely the scenario, an advance directive and health care power of attorney can help head off disagreements between family members and provides clear instructions on our medical wishes.
    • These documents give clients the opportunity to specify their end-of-life wishes and to nominate an individual to make medical choices in the event they are unable to do so.
  • Letter of Instruction
    • This document serves as a “road map” for your personal representatives. It gives you the opportunity to provide instructions on everything from your obituary to organ donation.
    • It also tells your personal representative everything they need to know to manage your estate such as where you bank and who is your accountant.

Let us help you protect your family’s future.

We’re here to streamline the estate planning process and provide you with guidance as you make these important decisions. We help families of all sizes to design an estate plan that fits each family’s goals and circumstances. Contact Montana Legal Justice, PLLC to set up your estate planning appointment.