We understand. Thinking about estate planning isn’t at the top of your list of enjoyable things to do. Maybe you are concerned that the process will be outrageously expensive, time-consuming, confusing and/or emotionally draining. It doesn’t have to be (we can help with that), and we are here to say this: just do it. Your family members will thank you someday.
In addition, many folks are intimidated by the number of documents involved and the terminology (What is a revocable trust? Advance medical directive – is that different from a living will?). Here is a quick primer to remove some of the mystery so you can feel confident in moving forward with your estate plan.
Formally known as a Last Will and Testament, a will names a person to handle the affairs of your estate (the “executor”) and guardian(s) of your minor children, if any, and directs how your executor must pay your debts and distribute your assets and property upon your death. A will can also include directions regarding care of your pets and funeral arrangements. Wills must be probated by a court, which is a public process that takes some time and money, although how much depends in part on the jurisdiction in which the will is being probated.
In the absence of a will (known as “intestate”), your assets and property will pass according to law. The laws may not be consistent with your wishes and certainly do not account for your individual needs, which is why we urge every single adult to have a stand-alone will or a pour-over will/trust, depending on his/her situation.
While there are several different types of trusts that can be used for estate planning purposes, the most commonly used and applicable to most people’s needs is the Revocable Trust. A revocable trust is in essence an agreement between you (the “grantor”) and a trustee(s) (typically yourself and/or your spouse during your lifetime, and your spouse and/or your children after your death) that instructs the trustee(s) on how to handle and distribute your assets and property during your lifetime, as well as upon your death. In contrast to a will, a trust takes effect as soon as you create it. The trust holds legal title to your property for the benefit of a person (the “beneficiary”). You are the beneficiary during your lifetime, and your spouse and descendants are beneficiaries after your death. In order for assets and property to be included in a trust, they must be put in the name of the trust.
In contrast to a will, a trust passes outside of probate, which can save time and money and remain private. In addition, a trust can be used to plan for disability and, depending on your assets, may be used to save money on taxes upon your death.
Power of Attorney
A Power of Attorney names an individual or individuals (your “agent(s)”) to act on your behalf, typically with regard to financial matters. Generally, powers of attorney are “durable,” meaning they are in effect regardless of your capacity and give the agent broad powers in order to handle your affairs during your lifetime. However, powers of attorney can be tailored to take effect only upon incapacity and/or to limit the powers of the agent.
Health Care Power of Attorney/Advance Medical Directive
A Healthcare Power of Attorney names an individual or individuals (your “agent(s)”) to make decisions regarding your health care in the event that you are incapacitated (incompetent or otherwise unable to make your own decisions). An Advance Medical Directive, also known as a Living Will, provides for the withdrawal of life-sustaining treatments in the event of an incurable illness or injury from which there is no reasonable chance of recovery.
One final note. In spite of what those TV ads may tell you, an estate plan is not a do-it-yourself endeavor. Sure, you could print a will template from a legal forms website, fill it out and have it notarized, but would you go out to play a round of golf with only your putter? Of course not. You need more than just a will to have an effective plan. An attorney can help you determine which of the estate planning documents above best fit your situation, and draft them in a personalized, tailored way so that they work together to facilitate your wishes.
Christine Collins is an estate planning attorney in Williamsburg and Newport News, Virginia.
This may be considered AN ADVERTISEMENT or Advertising Material under the Rules of Professional Conduct governing lawyers in Virginia. This document is designed for general information only, and should not be construed to be formal legal advice or the formation of a lawyer/client relationship.