Estate planning is imperative, but is often overlooked as many families consider their individual situations.
Many people are dismissive, or don’t believe they have enough money to consider planning for the unexpected. However, a proper estate plan will make sure that your responsibilities do not become a burden on your family in the event of your mental or physical absence. An “estate plan” does more than guarantee property transfer, it provides a roadmap for loved ones and family so they are taken care of, and your wishes are honored. The estate plan answers questions like:
Small estate administration can be much less burdensome and time consuming and therefore is less expensive than going through probate. The first thing that must be determined is whether the estate should be admitted to probate, or whether it can be collected and distributed through small estate administration. Your attorney will let you know if this is an option during your Family Administration Session.
- Who will take care of the children?
- How do we ensure the house stays within our family?
- How will we pay for all of the expenses?
- What were my loved ones’ wishes?
- How do I know that my financial affairs will be taken care of when I can’t manage them myself?
- How will my children give me the best care possible if I am unable to speak for myself?
- How do I know my family will move forward with as few hurdles as possible when difficult times arise?
Your “estate” consists of all the property you own at the time of your death.
- What is an “Estate”?
Your “estate” consists of all the property you own at the time of your death. It includes retirement plans, life insurance, real estate, bank accounts, investments, and any of your personal property such as cars, artwork, jewelry and hunting equipment.
- Why an Estate Plan?
Whether you are beginning your career or ensuring that your assets are passed down to the next generation, an estate plan is essential. For parents of young children, the estate plan is key to ensuring those children will be taken care of and monetary assets are distributed responsibly. An estate plan establishes guardianship over children and points to those trusted people who will help make monetary decisions with what is left for them. For more mature families, an estate plan will protect your assets and maximize value. Different estate planning documents minimize the amount of taxes paid when transferring property to loved ones, or safeguard retirement plans in order to fully utilize tax deferral. Other estate planning documents entrust those people who would make health care decisions in the event you could not communicate your intentions, or outline your wishes in regards to life-prolonging medical care.
- Durable Power of Attorney
The Durable Power of Attorney (DPOA) is where you designate an agent to make financial decisions on your behalf. The DPOA can grant the agent immediate power over your affairs or power that does not become effective unless you are deemed incapable. The more common version is the latter, many clients prefer control over their own accounts and would rather not grant authority before an emergency occurs. However, A DPOA granting immediate power can be helpful for those who want a loved one take care of their affairs in order to forego financial stressors later in life. Clients who move or travel frequently might also consider a power of attorney to safeguard and grow their assets while away in another state or country. More commonly, clients seek to grant power that only goes into effect in the event of an emergency. With proper estate planning, loved ones will not have to struggle to make sure everyday bills and costs are taken care of. If an emergency does occur, the durable power of attorney ensures that care is taken, so that when the situation improves your family can resume normalcy with as little financial difficulty as possible.
- Health Care Power of Attorney
Your Health Care Power of Attorney (HCPOA) is where you designate the person who would speak for you in the event that you couldn’t speak for yourself. Many people fear putting their family in the position of having to fight over medical decisions in the event of a serious accident. The HCPOA clears up your intent as to who should have final authority in those rare but anxiety filled times for your family. Appointing an agent to act on your behalf gives everyone the peace of mind that a plan exists and keeps decisions on medical care away from conflict. When no HCPOA exists, a spouse will generally have authority over decisions. In the absence of an HCPOA and spouse, a family member or friend must apply for guardianship in order to make decisions. Guardianship can be costly and take time from being able to make informed decisions. A healthcare power of attorney also allows you to identify those medical procedures or decisions you would not like your agent to consider. In the HCPOA, you can state your wishes as to organ donation, and whether or not an autopsy should be conducted. There is also ample room to detail any issues you might have with a specific procedure when you are executing the document. Arizona is one of a few states to offer the framework for a Mental Health Care Power of Attorney. The Mental Health Care Power of Attorney allows you to grant your agent the power to admit you to a facility, but only after evaluation by a licensed professional. A mental health care power of attorney is helpful in those situations where Alzheimer’s and dementia may play a factor. Each estate plan should provide for multiple eventualities. The HCPOA addresses many issues and keeps decisions about your well-being as close to your intent as possible.
- Living Will (Final Directives)
The “Living Will” Includes directives for end of life care and functions as an advanced health care directive. The “living will” instructs the person designated in the Healthcare Power of Attorney. Generally, through the living will, you will make decisions about your care in the event of a situation where you are in a persistent vegetative state or where there is no likelihood of recovery. Many people fear living in a mental state where there is a limited quality of life, or limited to no mental activity. For some, the toll of medical care at that point is excessive, and those people would rather not sustain existence. Others prefer that they receive all medical care necessary to sustain life. Each of these options is available through the Living Will, and through planning you have the opportunity to choose. Those who do not plan rely on a designated priority list created through state law to determine which person makes the available decision.
- Is a Living Will necessary? Why make final directives?
So many people discuss end of life scenarios but never make concrete plans for unexpected events. A “living will” is necessary to address those events for which loved ones will want every decision to be as easy as possible. It is difficult to deal with crisis, and sometimes the potential exists for a fight over whether or not to provide life sustaining treatment. We seek to provide solutions for potential problems before they occur so that those leaving a legacy can do so in peace.