As an estate planning attorney here in Cincinnati, I always recommend clients have the right estate plan for them, their unique situation, and goals. And for most clients, particularly those with significant assets and heirs, that would likely be a comprehensive plan with a will, trust, various legal instruments, etc. But today, I’d like to break estate planning down into what I would consider three levels: Good, Better, and Best. Here we go!
GOOD Estate Planning
The Good level includes a will. Everyone should have one, though only about 50% of adults in the USA do. Why is a will important? First, it ensures that your heirs have your legal direction on how you want your assets distributed. This is not that key if you only have one heir, but it can get complicated if you have multiple heirs. Suppose an individual dies without a will, called intestate. In that case, the court appoints an administrator and sometimes makes asset distribution decisions. And they may not have been the decisions you would have made. In addition to being complicated, it can add considerable time to the process. This means heirs may have to wait even longer to receive assets.
A simple will can streamline the process. It is essential to make sure the will is legal. Telling someone verbally what you want to happen doesn’t count. Writing it on a bar napkin won’t cut it. Execute a will with an attorney to ensure the court system will honor your wishes.
BETTER Estate Planning
The Better level includes a will but adds essential legal documents that can make a difference for you and your loved ones. Those documents might be:
· Living Will
· Healthcare Power of Attorney
· General Power of Attorney
A quick review of what each is and why it’s important:
A Living Will: This document comes into play if/when you are in a medical state, perhaps from an accident or stroke, where the attending physician determines with some certainty that there is no hope for your recovery. Today’s advanced life support systems can keep a person alive for years, even if their brain is no longer functioning. Most people don’t want that for themselves. Your living will communicates your end-of-life wishes to the physicians. For example, perhaps you don’t want to be put on life-support when there is a reasonable degree of medical certainty that there is no hope of recovery. This document informs your loved ones, too, so they don’t have to decide for you.
A Healthcare Power of Attorney: This legal document allows an individual to designate another person to make medical decisions for them when they cannot make decisions for themselves. Privacy laws are getting more restrictive all the time. One cannot assume a spouse, a sibling, or an adult child will be permitted to make decisions regarding your care unless you have legally designated them in advance to do so. For example, suppose you are in an auto accident and cannot make your wishes known about the proposed medical treatment. In that case, you want a trusted individual you chose in advance to provide that information to the health care providers. Without this legal document, it also sets the stage for potential disagreements among loved ones about your care. No one wants that.
A General Power of Attorney: This legal instrument allows someone of your choosing to handle your affairs if you are unable to do so. Again, the example of your being in an auto accident and perhaps in a coma. You want your mortgage and other bills to be paid so you aren’t hit with late fees or worse. Individuals choose a trusted family member or friend and provide to them, in advance, what they need to know should they have to step in to help in an emergency.
Other legal tools might be included in the BETTER level, but the three abovementioned are the most common.
BEST Estate Planning:
The BEST estate plan includes everything above plus adds a trust. What is a trust, you ask? A trust is a document used to control the distribution of your assets upon death and further, during your lifetime. It provides directions as to how your assets will be managed and controlled. Assets in the trust are entrusted to a trustee, usually yourself while living, who holds legal title and manages the assets until they are distributed to one or more beneficiaries. Setting up a trust has multiple benefits, but one that is touted most often is that it helps avoid probate. Assets held in the trust do not have to go through probate. A side benefit is that what is in the trust is not open to the public, as do assets that go through probate. Your loved ones will sincerely appreciate your forethought of having a trust, as it will save them considerable time, trouble, and potentially money. By establishing the BEST ESTATE PLAN, you can rest easy. You’ve taken care of your affairs and loved ones and done everything possible to protect your hard-earned assets. It’s a good feeling.
Whatever you feel is right for you, GOOD, BETTER, OR BEST, I’d be happy to work with you to set up what is right for you. This is all about YOU and your loved ones. Only you know what is best. Call me today to talk about it at 513-399-7526 or visit my website www.davidlefton.com