Estate Planning FAQ

What is estate planning?

Estate planning is the process of making legally effective arrangements to carry out your specific wishes if something happens to you or those you care about. For many people, good estate planning is more than just a simple Will. It should also minimize potential taxes and fees, and set up arrangements to make sure your wishes regarding health care treatment are followed. On the financial side, a good estate plan coordinates what would happen with your home, your investments, your business, your life insurance, your employee benefits (such as pension and 401K plans), and other property in the event you became disabled or die. On the personal side, a good estate plan includes directions to carry out your wishes regarding health care matters, so that if you are ever unable to give the directions yourself, someone you select will do that for you, including giving instructions to your doctors about administering or withholding extraordinary forms of treatment if your are in a terminal condition.

Does it make sense to use an attorney? Is it expensive?

An attorney who regularly practices in the fields of wills, trusts, probate and estate planning is best qualified to provide you with really sound legal advice as you put your estate plan into place. When you speak with an estate planning attorney, you can get answers to your questions --including how much estate planning would cost. Often the expense incurred in retaining an attorney to give you that advice and to prepare the necessary documents to establish your estate plan is negligible compared to what your estate would pay in the event of your death if there was no planning or poor planning.

When should I start my estate plan?

The only time that you can prepare and implement an estate plan is while you are alive and have the mental capacity to make the decisions required for estate planning. If you do not make a plan until after you become unable to manage your own affairs or suffer from some other disability which affects your legal capacity, your estate plan may be effectively challenged by those who assert that you lacked the necessary mental capacity at the time the documents were created, or that you were subjected to fraud, coercion or undue influence during the creation and implementation of your plan.

What sorts of instructions are made as part of an estate plan?

An estate plan consists of one or more documents that set forth instructions. Some documents are used to control health care decisions, others control your property in the event of your incapacity, and still other documents will control the distribution of your property in the event of your death.

What about books on estate planning?

Many guides to estate planning are available. Some contain valuable and useful information. Others are misleading or greatly oversimplified. Beware of friends or other individuals who assure you that you can effectively do your own planning and prepare your own documents. While it is helpful for anyone entering this process to know as much as possible about estate planning, there is no substitute for the advice and efforts of a professional estate planning attorney.

Should I have an estate plan?

You should have an estate plan if:
• You are concerned about who will receive your property after your death
• You have substantial assets and do not wish to have them consumed by taxes
• You are the parent of minor children
• You want to make sure that your property is used to provide for your family after your death
• You are concerned about how you may be treated if you become disabled
If you are within any of these categories, you should have an estate plan.

What are some typical estate planning documents?

Several of the following documents are typically used as part of the estate planning process:
• A Will, sometimes called a Last Will and Testament, to transfer property you hold in your name to the person(s) and/or organization(s) you want to have it. A Will also typically names someone you select to be your Personal Representative (or Executor) to carry out your instructions and names a Guardian if you have minor children. A Will only becomes effective upon your death, and after it is admitted to probate. You can execute a new will as long as you are still alive and mentally competent.
• A Durable Power of Attorney for Health Care or "Health Care Proxy" appoints a person you designate to make decisions regarding your health care treatment in the event that you are unable to communicate with your doctors.
• A Living Will or Directive to Physicians is an advance directive that gives doctors and hospitals your instructions regarding the nature and extent of the care you want should you suffer permanent incapacity, such as an irreversible coma, and cannot make decisions yourself or express your wishes to your doctors.
• A Living Trust may be established to manage your property while you are still living and after your death. You can select anyone you wish—including yourself -- as the Trustee(s) to carry out the instructions you place in the Trust document. Unlike a Will, a Living Trust becomes effective immediately. It continues in force during your lifetime, even if you become disabled, providing for your needs and those of your family. It may terminate at your death and distribute the assets to the persons whom you have named, or continue for as long as you specify, making payments to your loved ones. If the trust is "revocable", you may make changes in and even terminate it during your life. An irrevocable trust may be used to obtain certain tax benefits, but is very difficult (and sometime impossible) to change or terminate.
• A Family Limited Partnership can be used to own and manage your property, in a similar manner to a Trust, but allowing additional tax planning techniques to be employed.Family Limited Partnerships are typically used for those who have large estates and thus have a need for specialized estate planning in order to minimize federal and state estate/death/inheritance taxes as well as protecting your assets from creditors.

How can an estate plan prevent a guardianship or conservatorship proceeding?

If you should become unable to handle your financial affairs, family members or social service agencies might petition a court to appoint a conservator for your assets, an expensive proceeding which may result in someone you never picked being put in charge of your property. An estate plan can avoid the need for such a proceeding by the use of one or more of these tools:
• A Living Will or Directive to Physicians contains your instructions as to whether artificial life support systems are to be used or withheld.
• A Durable Power of Attorney for Property enables you to authorize a person to act in your place in the event of your incapacity; this "attorney-in-fact" can manage your financial affairs without the need to have intervention by the courts.
• A Trust or Family Limited Partnership may be used to hold property; the Trustees or Partners manage the property held by either of these entities.
• Both the Trust and the Family Limited Partnership continue to manage the property even if you are incapacitated.

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