Estate planning: two words as well-received as ‘dental appointment.?
Most people want to provide for their families but hate having to think about dying. Like a song says: ‘Everybody wants to go to Heaven but nobody wants to die.?
Estate planning is a form of asset protection, like homeowners? insurance. Americans work on average 90,000 hours during their lifetime to build an estate. But less than 30 percent of Americans will spend even a few hours to prepare an estate plan to protect those hard-earned assets from potential taxation, probate fees and distribution to unintended individuals.
Everyone has a default estate plan, unfortunately written by your State Legislature. If you die ‘intestate? (without a will) your assets are distributed by law which might be completely different than how you would want them allocated. Why let someone else determine who inherits your assets?
Not scary enough to let politicians control your estate? As Ben Franklin once wrote, only death and taxes are certain so it is guaranteed that an estate plan (yours or the state’s) will someday be needed.
Fortunately, a properly prepared estate plan can be multi-purpose, kind of like a legal Ginsu Knife. Some plans include revocable ‘living? trusts which not only transfer your assets after you die but could also protect you during your lifetime in the event you become temporarily incapacitated due to an accident or serious illness.
A will, however, is a ‘dead? instrument which is only effective when you are deceased.
Unlike a will, a trust can avoid probate, a process which invokes cheery images similar to an IRS audit. But sometimes probate court supervision is appropriate if, for example, you are anticipating family disputes. Let the probate court decide those issues which you believe are likely to be contentious.
In addition to wills and trusts, durable powers of attorney (POA’s) are frequently included in estate plans. These documents could enable you, again without probate, to authorize individuals to act on your behalf if you are incapacitated or otherwise unable to act for yourself.
General powers of attorney usually deal with financial matters such as handling bank accounts and investments. They are also used in real estate transactions, where POA’s are used to name ‘agents? to represent buyers and/or sellers who cannot attend a closing in person perhaps due to parties being in another state.
A durable power of attorney for health care is used to name ‘patient advocates? who would be involved in making life support decisions for you if you are in an irreversible coma.
Who is more qualified than you to select these ‘advocates? and to indicate the level of care you want provided?
Estate planning is all about controlling your legacy. Your assets, after they have benefited you during your lifetime, should be distributed according to your instructions. Your goals. Your legacy. Your estate plan.
Please feel free to contact me with questions on this subject. Since this article covered general concepts, individuals are encouraged to seek legal counsel to assist them with their specific needs.
Henry S. Woloson is an attorney and counselor at law in Independence Township. Call 248-625-6736.