Estate planning can seem like a confusing endeavor, and you simply may not know where to begin. With this in mind, we are going to look at four must-have estate planning documents in this post in an effort to shrink the matter down to size.
The first component is an asset transfer vehicle, and many people assume that a will is the right choice unless you are extremely wealthy. In reality, the simple will is limiting, and it is really not that “simple” when you understand the administration process.
A will is admitted to probate, and the heirs do not receive their inheritances while the estate is being probated by the court. Depending on the jurisdiction, it will usually take a minimum of eight months, and this is a rather long time to wait for an inheritance.
Expenses reduce the value of the estate before it is distributed to the heirs, and anyone that is interested can access the records. The loss of privacy is generally disconcerting, but the information can potentially cause hard feelings among interested parties.
Another drawback is the fact that the inheritors receive lump sum bequests all at once, and this can be a source of concern when you have an heir that is not good with money.
The revocable living trust is an alternative that can be used to steer clear of these negatives. You would be the trustee while you are living, so you would have total control of the assets. In the trust declaration, you name a successor trustee to assume the role after your death.
When the time comes, the trustee would distribute assets to the beneficiaries in accordance with your wishes, and probate would not be a factor. Plus, you can include a spendthrift clause to protect the principal from the beneficiary’s creditors, so there is built-in asset protection.
This is just one type of trust that can be utilized, but there are others that serve specific targeted purposes. You should discuss your options with an estate planning attorney so you can make fully informed decisions.
Durable Powers of Attorney for Health Care and Finances
A Health Care power of attorney allows you to identify who can make decisions about your health care in the event you are too sick to make your own decisions. It also allows you to identify your wishes regarding organ donation and life support.
Another durable power of attorney should be added to empower someone to manage your financial affairs. If you have a living trust, you can designate a disability trustee to administer the trust in the event of your incapacity.
Medical information was shared freely (and many would say inappropriately) until the Health Insurance Portability and Accountability Act (HIPAA) was enacted in 1996. Among other things,the HIPAA law prevents doctors from communicating medical information with anyone but the patient. This applies to family members, and it would apply to the agent that you name in your durable power of attorney. To allow them access to your medical records, your plan should include the appropriate HIPAA authorization.
Download Our Estate Planning Worksheet!
We have prepared a worksheet that you can use to gain a more thorough understanding of the estate planning process. It is being offered free of charge, and you can get your copy if you visit our worksheet access page.
Need Help Now?
If you have already decided that you should work with a Naperville, Illinois estate planning attorney to put a plan in place, there is no time like the present. You can send us a message to request a consultation appointment, and we can be reached by phone at 630-568-8611.