Everyone should have an estate plan. Your estate plan is the roadmap in a crisis, providing guidance to loved ones on how to proceed and ensuring your wishes and goals are met. For those with young children or children with disabilities, estate planning becomes even more important.
While laws are in place governing the disposition of assets on death and priority to act on someone’s behalf in the event of incapacity, those laws may require court involvement and may clash with a person’s intent and goals regarding what they feel is best for themselves and their loved ones. Failing to plan often leads to delay, expense and unwanted consequences that could have been avoided.
An estate plan allows you (not the court) to decide what is in your best interest and your family’s best interest by giving you the right to select the individuals you trust to care for you and your children and provide the framework for managing your assets.
Questions To Be Answered in Connection with An Effective Estate Plan
Though not an exclusive list, below are important questions that should be addressed in connection with the well-crafted estate plan.
- If something happens to you and you cannot communicate regarding your financial or medical needs, who decides?
- If you pass away, who is responsible for the settlement of your affairs?
- If you have children, who will raise them?
- If your children receive assets, who will manage those assets for them?
Key Elements of an Effective Estate Plan
The key components of the estate plan everyone should have are a Last Will and Testament, a Revocable Trust, a Durable Power of Attorney, and a Health Care Proxy.
Interwoven into the estate planning process is the contemplation of how best to avoid or minimize involvement of the probate courts. Probate is the court-supervised settlement of a person’s estate. Probate Courts oversee decisions regarding disposition of a person’s assets and matters involving guardianship or conservatorship if there is a minor child or disabled child interested in the estate. Having a Last Will and Testament will provide input to both the estate administrator and the court regarding your wishes on how assets are to be distributed. You may also identify the parties with priority to act as guardian to care for your children or conservator to manage your children’s assets.
Implementing a Trust into your estate plan is an excellent method for the avoidance of probate. Assets titled in trust do not go through probate and are readily available for use by a successor Trustee who is working through the settlement of an estate. Assets that are held in trust for children are also not immediately subject to the oversight of the court, and avoid the need for conservatorship proceedings, where the court appoints a party to manage and control assets until minors reach the age of majority. Assets held in Trust for children can also be designed to maximize protection from future creditors, and can continue for the child’s lifetime, with money available as needed, but still protected from outside parties.
Estate planning is not just about what happens after death. Lifetime decision making, such as financial choices or health care choices, are governed by your Power of Attorney and Health Care Proxy. The Power of Attorney protects your assets through access and oversight and can manage your finances by continuing to invest your assets and pay expenses as they arise. A Health Care Proxy will determine the best course of treatment if you are unable to communicate effectively regarding treatment choices.
Once you have signed your estate plan, congratulations! You have established a roadmap that will provide for and protect your loved ones and minimize court oversight. Keep in mind that as your life changes, your estate plan may need to change too. A good rule is to review your estate plan every 1-2 years to ensure it still meets all your goals. An estate plan that has not been updated in a long time may not be as effective. As your life changes, so do the laws, along with your finances and their impact on your estate plan. All these considerations should be part of your periodic estate plan review.
If you have not yet created an estate plan, there is no better time than today to contact an estate planning attorney to create a plan that protects you and your family and makes sure that your wishes are known.
Justin McCarthy is an Estate Planning attorney at the Boston-based law firm Conn Kavanaugh Rosenthal Peisch & Ford, LLP.
He can be reached at jmccarthy@connkavanaugh.com
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