King & Wood, P.A.

How Estate Planning Conveys Your Wishes

“Estate planning involves taking inventory of your assets and liabilities and deciding how your survivors deal with those upon your death.”

When musical legend Prince died, it took six years in court to determine who would inherit his worldly possessions because he didn’t have an estate plan. While most of us aren’t dealing with a Prince-sized estate, no family needs to go through the turmoil and expense of fighting over a loved one’s estate. That’s where estate planning comes in, as explained by the article “Let your dying wishes be known by estate planning—before it’s too late” from Star Tribune.

The biggest step is getting started.

Estate planning involves taking inventory of all your assets and liabilities and deciding how you want survivors to deal with these upon your passing. The main legal methods used are wills and trusts. However, a comprehensive estate plan also includes health care directives, or living wills, along with powers of attorney for financial and health care decisions.

Your estate plan should include funeral plans. However, these must be available immediately after your death, so loved ones can follow your wishes. If they are in your will, they may not come to light for weeks after your funeral has already taken place.

Prepaying for your funeral may not be possible for everyone. However, finances aside, it’s best to have all these estate planning angles covered in advance. Have a conversation with your family, so they understand your wishes and goals.

Probate is the legal process dictating what happens to assets when you die. Who makes these decisions depends upon whether you have a will. If you have no will, a court-appointed representative deals with your estate according to state laws. Property is gathered, inventoried, debts are paid and what’s left over is distributed to heirs.

In most states, estates pass to spouses. If there is no surviving spouse, children receive any inheritance or obligation in equal shares. If there are no children, assets might go to parents, siblings, nieces, nephews, or other relatives. Every state has different laws, so consult with an estate planning attorney to learn what your state will do in the absence of a will.

In blended families, this can become more complex, since stepchildren have no legal right to inherit.

If there are no heirs or no relatives that can be identified, assets are then deposited with a county treasurer until claimed.

When there is a will, a person you name in the will to manage your affairs, the executor, will oversee managing the estate. However, a probate court must first deem the will valid and approve the named executor.

The probate process varies by jurisdiction, with some being more time-consuming and costly than others. For this reason, many families rely on the use of revocable trusts. It takes a little more work at the start of the estate planning process but streamlines distribution and protects heirs.

The will contains specific instructions for real estate, personal property and any other assets without a beneficiary designation. Most retirement savings accounts and life insurance policies have a beneficiary named and the assets go directly to the heir, bypassing probate.

Think of a trust like a Ziploc bag—during your lifetime, it is easily opened, and assets can be moved in and out as you wish, including changing who will receive what. When you die, the bag becomes an irrevocable trust, and the trustee deals with everything contained in the trust as per the trust's instructions.

A well-planned estate brings peace of mind to parents, who know they have done right by themselves and their family. It also fosters conversations about admittedly difficult topics, helping most families prepare for one of life’s eventualities.

Reference: Star Tribune (Oct. 30, 2023) “Let your dying wishes be known by estate planning—before it’s too late”

How Estate Planning Conveys Your Wishes

“Estate planning involves taking inventory of your assets and liabilities and deciding how your survivors deal with those upon your death.”

When musical legend Prince died, it took six years in court to determine who would inherit his worldly possessions because he didn’t have an estate plan. While most of us aren’t dealing with a Prince-sized estate, no family needs to go through the turmoil and expense of fighting over a loved one’s estate. That’s where estate planning comes in, as explained by the article “Let your dying wishes be known by estate planning—before it’s too late” from Star Tribune.

The biggest step is getting started.

Estate planning involves taking inventory of all your assets and liabilities and deciding how you want survivors to deal with these upon your passing. The main legal methods used are wills and trusts. However, a comprehensive estate plan also includes health care directives, or living wills, along with powers of attorney for financial and health care decisions.

Your estate plan should include funeral plans. However, these must be available immediately after your death, so loved ones can follow your wishes. If they are in your will, they may not come to light for weeks after your funeral has already taken place.

Prepaying for your funeral may not be possible for everyone. However, finances aside, it’s best to have all these estate planning angles covered in advance. Have a conversation with your family, so they understand your wishes and goals.

Probate is the legal process dictating what happens to assets when you die. Who makes these decisions depends upon whether you have a will. If you have no will, a court-appointed representative deals with your estate according to state laws. Property is gathered, inventoried, debts are paid and what’s left over is distributed to heirs.

In most states, estates pass to spouses. If there is no surviving spouse, children receive any inheritance or obligation in equal shares. If there are no children, assets might go to parents, siblings, nieces, nephews, or other relatives. Every state has different laws, so consult with an estate planning attorney to learn what your state will do in the absence of a will.

In blended families, this can become more complex, since stepchildren have no legal right to inherit.

If there are no heirs or no relatives that can be identified, assets are then deposited with a county treasurer until claimed.

When there is a will, a person you name in the will to manage your affairs, the executor, will oversee managing the estate. However, a probate court must first deem the will valid and approve the named executor.

The probate process varies by jurisdiction, with some being more time-consuming and costly than others. For this reason, many families rely on the use of revocable trusts. It takes a little more work at the start of the estate planning process but streamlines distribution and protects heirs.

The will contains specific instructions for real estate, personal property and any other assets without a beneficiary designation. Most retirement savings accounts and life insurance policies have a beneficiary named and the assets go directly to the heir, bypassing probate.

Think of a trust like a Ziploc bag—during your lifetime, it is easily opened, and assets can be moved in and out as you wish, including changing who will receive what. When you die, the bag becomes an irrevocable trust, and the trustee deals with everything contained in the trust as per the trust's instructions.

A well-planned estate brings peace of mind to parents, who know they have done right by themselves and their family. It also fosters conversations about admittedly difficult topics, helping most families prepare for one of life’s eventualities.

Reference: Star Tribune (Oct. 30, 2023) “Let your dying wishes be known by estate planning—before it’s too late”

Estate Planning in Seven Steps

“Estate planning is a profound journey that transcends generations, ensuring that your legacy endures with precision and care.”

From defining financial objectives and understanding legal issues to safeguarding assets and establishing directives, every step in the creation of an estate plan is a brushstroke in the painting of your personal legacy. A recent article from Market Business News, “Crafting Your Legacy: 7 Steps in the Estate Planning Process,” describes the process of creating what is essentially a testament to protect loved ones.

Create an inventory of assets. You’ll need to be meticulous about this to ensure that all your assets are accounted for. This includes properties, investment accounts, items of value and sentimental possessions. It should include detailed descriptions and appraisals. This forms the foundation of your estate plan.

Consider your family’s needs after your death. Anticipate your family’s financial, practical, and emotional needs. Consider things like educational expenses, healthcare costs, ongoing support for basics, and, depending on your situation, recreational activities. Address this concern in your estate plan, so your family will have a secure foundation after your passing.

Select beneficiaries. This is simple in some cases and more complicated in others. You may have a traditional family or one including non-family members who are like family to you. Are there charitable concerns you want to address?

How do you want your estate divided? Be specific to avoid confusion and ensure that assets are distributed according to your intentions. Language needs to be specific and clear, with no room for ambiguity.

Store documents properly. Safeguard estate planning documents, which include your will, Power of Attorney, Health Care Power of Attorney, Living Will and others, in a secure location, like a fire and water-proof home safe. Do not put them in a bank safe deposit box, as the bank may seal the box upon your death and not allow representatives to access the box’s contents. Talk with your estate planning attorney about their recommendations.

Update your estate plan on a regular basis. Life changes, and so should your estate plan. It should be reviewed every three to five years or whenever there is a life event, including marriage, divorce, birth, or changes in your financial situation. Keeping an estate plan updated ensures that it remains relevant to your life.

Seek help from an experienced estate planning attorney. An estate planning attorney will help you navigate the complexities of legal documentation, tax implications and probate. You’ll want to be sure that your estate plan aligns with state laws. The knowledge of an estate planning attorney will provide you with peace of mind, knowing you’ve done the right thing to protect your family and ensure your legacy.

Reference: Market Business News (Oct. 28, 2023) “Crafting Your Legacy: 7 Steps in the Estate Planning Process”

Revocable Trusts Make Sense for Retirees

“If you plan to pass assets through a will, just remember that most of the time, that will becomes public once the probate estate is closed. Therefore, if you left one of your childrenout, left your favorite a bit more or are just a private person, you may be better off with a trust.”

Estate plans are not a one-size-fits-all commodity, especially when it comes to trusts. A revocable trust makes sense in many, but not all, cases, says a recent article from Kiplinger, “Four Reasons Retirees Need a (Revocable) Trust.” How can you tell whether or not you need a revocable trust?

Would you prefer to avoid probate? When people tell their estate planning attorney they need a trust, no matter what, there’s usually a family story involved. Maybe a parent created a trust that worked well, or maybe their parents didn’t have a trust, and they had a difficult experience in probate court.

Avoiding probate is a good reason to have a trust. Assets passing through a will go through probate, which is different depending on your jurisdiction. It can be expensive and time-consuming, although it can also be painless. A local, experienced estate planning attorney will know what you can expect.

Trusts are especially useful for people who own assets in multiple states because assets must be probated in each state. With a trust, assets pass to heirs directly and efficiently.

Do you want to control your estate? If some of your adult children are good with finances, but some are not, a trust allows you to structure asset distribution with great specificity. A certain percentage of assets can be released at certain ages, or annual distributions can be made according to any guidelines you set.

Would you prefer your estate to be private? Creating an estate plan is often an emotional process, balancing your goals and family dynamics. These wishes are typically kept private, except those who have some role in creating the plan. If your assets pass through probate, remember the will becomes part of the public record once it is admitted to probate. Anyone, from an estranged family member to a scammer, can see what you gave and who you gave it to. Trusts, on the other hand, are private.

Do you have a plan for incapacity? Your estate plan should contain a number of documents in case of incapacity, including Power of Attorney, Healthcare Proxy and a Living Will. In addition, a revocable trust with a successor trustee will create continuity and simplicity in managing your financial matters. The successor trustee named in the trust document will manage the assets according to the terms of the trust if you become incapacitated. Without such a trust in place, your family would need to go through the legal process of seeking a conservator to manage the assets in the trust.

An estate planning attorney is the best person to discuss whether or not a revocable trust belongs in your estate plan, along with other planning strategies.

Reference: Kiplinger (Sep. 13, 2023) “Four Reasons Retirees Need a (Revocable) Trust”

Top Five Mistakes to Avoid When Passing Wealth to the Next Generation

“What could go wrong with this transfer of generational wealth? Several things, in fact.”

Many families count on the transfer of general wealth and the transfer of assets from generation to generation. A report from Cerulli Associates says approximately $84 trillion will be passed from today’s older generation to heirs by 2042.

For this wealth transfer to succeed, parents and heirs should consider the pointers in a recent article from yahoo! finance, “Don’t Make These 5 Mistakes When Passing Down Generational Wealth to Your Family.”

Prepare heirs for their inheritance. Speak with family members about how their inheritance might change their lives. Educate them early on about personal finance, and introduce them to your advisors, including your estate planning attorney, financial advisor, and CPA.

Teach heirs how to be financially independent. Another problem can occur if children expect to receive an inheritance and don’t think they’ll need to work. This could get in the way of their personal and professional growth. You want them to know how to support themselves and the value of money earned.

Make sure to diversify your portfolio. When did you last increase your 401(k) contributions or diversify your portfolio? Be mindful of your investments. You don’t want to overestimate the value of your wealth or leave your children with an out-of-date investment portfolio.

Involve your children in the family business. If your legacy includes a family business, you need to consider the importance of ensuring that your children are fully involved in how the business operates and its financial needs and goals. If you simply toss the children into the business without completely understanding it, the transition may not work. As a result, your years of hard work could disappear quickly. A succession plan should be in place, so everyone knows what is expected of them.

Don’t neglect your estate planning. Sit down with an estate planning attorney and create a comprehensive estate plan, including a last will and testament, power of attorney, health care power of attorney, living will, and any trusts needed to pass wealth to the next generation. Do this long before you expect it to be needed. If you fail to create an estate plan, heirs will end up in probate court. It could take years before they receive the assets you want them to inherit.

Reference: yahoo! finance (June 5, 2023) “Don’t Make These 5 Mistakes When Passing Down Generational Wealth to Your Family”

Singles Need Estate Planning to Protect During Lifetime

“You’re single, and you don’t have an estate plan or even a will. Perhaps you think you don’t need either because you’re not wealthy and don’t have children.”

Estate planning is even more critical for singles than married couples—and it has nothing to do with whom you’ll leave assets to when you die. A recent article from AARP, “6 Estate Planning Tips for Singles,” explains how estate planning addresses support during challenging life events.

Estate planning addresses medical and financial decisions for an incapacitated person. For singles, these may be more complex questions to answer.

Whether someone has never married or is divorced or widowed, these are challenging questions to answer. However, they must be documented. In addition, singles with minor children need to nominate a trusted person who can care for their children if they cannot. Estate planning addresses all of these issues.

To be sure you complete this process, start with a conversation with an experienced estate planning attorney. This will help with accountability, ensuring that you start and finish the process.

Here are some pointers for singles who keep putting this vital task off:

What would happen if you don’t leave clear instructions about who will make medical decisions in case of incapacity? A doctor who doesn’t know your wishes will decide for you. If you don’t want to be placed on a ventilator for artificial breathing or fed by a stomach tube while in a coma, the decision will be made regardless of your wishes.

Dying without a will is known as dying “intestate.” All of your assets will be distributed according to the intestate succession laws in your state. If no relatives come forward to claim your property, the state receives your assets. This is not what most people want.

Part of your estate plan includes naming a personal representative—an executor—who will oversee your affairs after your death. You’ll want to designate someone who is organized, has good judgment and can handle financial matters. You should also name a backup, so that if the first person cannot or does not wish to serve, there will be someone else to take control. Otherwise, the court will name someone who doesn’t even know you to take on this task. It's better to designate someone than leave this to the state.

Your estate plan includes the following:

Last will and testament. This is where you nominate your executor, heirs and how your assets will be distributed. You can also appoint a guardian for minor children. Note that anyone named as a beneficiary on a retirement, insurance policy, or investment account supersedes any instructions in your will, so be sure to update those and check on them every few years to be sure they are still aligned with your wishes.

Living trust. This is a legal entity owning assets to be given to beneficiaries, managed by a trustee of your choosing, and avoids the delays and costs of probate.

Financial Power of Attorney (FPOA). This document authorizes someone you name to act as your agent and make financial decisions if you cannot. An FPOA can prevent delays in accessing bank and investment accounts and paying your bills. The FPOA ends upon your death.

Living will, durable medical power of attorney, or advance health care directive. These documents allow you to designate someone to communicate your health care wishes when you cannot. For example, you can include instructions on pain management, organ donation and your wishes for life support measures.

Health care power of attorney (HPOA). Like the living will, which is more associated with end-of-life care, the HPOA lets someone make medical treatment decisions on their behalf.

Be sure to communicate your wishes with family and friends. Tell your executor where your documents may be found and provide them with the information they’ll need so they may act on your behalf.

Reference: AARP (April 7, 2023) “6 Estate Planning Tips for Singles”

What You Need to Know When Making Your Will

“While many people think that estate planning is only for the wealthy, experts say that’s not the case.”

Contemplating your own mortality is not on anyone’s list of fun pastimes. However, having an estate plan is a gift to family members and is important whether you are wealthy or not, says a recent article from CNBC, “5 key things to know when you create a will and make other end-of-life plans.” Don’t be intimidated by the word “estate.” It simply means the sum of your possessions.

At its essence, your estate plan details whom you want to make decisions for you if you become incapacitated or when you die and who will inherit what you own.

Estate plans don’t need to be complicated. However, they do need to be done correctly, so working with an experienced estate planning attorney in your state of residence is essential.

Here are five key things to keep in mind as you start preparing your estate plan:

A will is never enough. The will is the foundation, identifying whom you want to receive certain property, naming an executor and naming a guardian for dependent children. However, some assets pass outside of the will, including retirement accounts, IRAs, life insurance policies and annuities. Any beneficiaries listed on these accounts supersede instructions in your will. Therefore, for example, if your ex-spouse is listed on the beneficiary designation and you never updated the document, they’ll inherit the account, regardless of how long you have been divorced.

Some 401(k) accounts require your current spouse to be the beneficiary, unless they legally agree otherwise. And regular bank accounts can have a beneficiary listed on a payable-on-death form. The same is true for brokerage and investment accounts.

If you don’t name a secondary beneficiary and the primary beneficiary has died, the assets will go into probate. Probate is the process by which the court distributes your estate. It can take months or years, depending on the state and the complexity of your estate.

When you create a will, you name an executor to carry out your wishes and administer your estate. This includes liquidating or closing accounts, distributing assets to heirs, paying debts and selling assets like your home. Make sure the person you name is willing to serve in this capacity.

Your estate plan should also include a Living Will, a document expressing your wishes for medical treatments you do and do not wish to have if you cannot communicate. In addition, a Power of Attorney is needed so someone you trust can handle your legal and financial affairs if you become incapacitated. A Health Care Power of Attorney lets someone of your choice make healthcare decisions.

Some assets get a “step-up in basis.” For example, it may be better to gift assets like stocks, bonds, or real estate to heirs after death. When these assets are sold, any increase from the so-called “cost basis” or value when the asset was acquired, and the sale price is subject to capital gains taxes. However, the heirs get a step-up in basis. The asset’s market value at your death becomes the cost basis for the heir. Any appreciation before that is untaxed. When the asset is sold, any gains (or losses) are based on the new cost basis. If you gifted these assets while living, they’d assume your original cost basis, which could lead to a big tax bill.

You may want to have a trust. For example, if you want your children to receive money eventually but not while they are too young to be responsible for a large sum, a trust can hold the asset. The trustee will make distributions according to the language of the trust. This lets you determine when your heirs will gain access to assets.

Don’t neglect to update your estate plan. Any time you have a significant life change, such as a birth, death, marriage, or divorce, you must review your estate plan. You’ll want to be sure your named executor is still the right choice and the guardian for your minor children is still the person you want to raise your children. If you move to a new state, you’ll want to consult with an estate planning attorney to be sure your estate plan is still valid, since estate laws are state-specific.

Reference: CNBC (March 19, 2023) “5 key things to know when you create a will and make other end-of-life plans”

Top 10 Estate Planning Myths

“Everyone needs to worry about estate planning. That planning doesn’t only pertain to what happens when you die but what could happen if you end up incapacitated.”

Estate planning addresses many issues, from who inherits your property or handles your finances to who takes care of you if you’re incapacitated to who manages funds for a disabled child. Unfortunately, there are many myths around estate planning, as explained in the recent article “Debunking the Top 10 estate planning myths” from Insurance News Net.

Only wealthy people need estate planning. This is easily the biggest myth of estate planning. Estate planning addresses planning for incapacity and taking care of your legal and financial affairs if you can’t. It also includes planning for end-of-life care and delineating what medical procedures you want and don’t want. Estate planning also creates a plan for families with minor children, if something should happen to parents.

Having a will means avoiding probate. Probate is the court process where the court reviews your will, establishes its validity and allows your executor to administer the estate. If your goal is minimizing or avoiding probate, talk with an estate planning attorney about retitling assets and creating trusts.

You need a trust to avoid probate. A trust is only one way to avoid probate. You could consider titling assets as joint tenants with rights of survivorship, although there are risks involved in doing so. Depending on your state of residence, you might also consider various transfer-on-death arrangements. Assets with beneficiary designations, like IRAs, 401(k)s, annuities, and other financial accounts, pass directly to beneficiaries.  You might also give away assets while you are living.

Putting a house in joint and survivorship ownership with an adult child will avoid probate. You may avoid probate. However, you create tremendous risk with this move. If your adult child becomes a half-owner, you’ll need their okay—and their spouse’s approval, too—to sell the house. You won’t qualify for the tax-free sale of your personal residence on half of the sale proceeds, unless your child also qualifies. If your child has financial problems or undergoes a divorce, their half ownership could be attached by creditors or be owned by an ex-spouse.

My will says who will inherit my IRA. The beneficiary designation on IRAs, life insurance and retirement accounts, and any account with a beneficiary designation overrides whatever your will says. The will does not control annuities, payable on death accounts, or transfer on death accounts and affidavits. You should check these forms periodically to ensure that the funds go where you want them to go.

I don’t need a will if my beneficiary forms are correct. However, you still need a will. For example, if a child dies before you, what happens to the assets if they were the beneficiaries? What happens to assets if a beneficiary is not of legal age and cannot inherit the money directly? Who makes decisions if there are multiple children and real estate decisions that need to be made? What if an adult child has a debt problem? Who will pay your final expenses? These are just a few issues that are addressed by wills.

A revocable trust will protect assets if I enter a nursing home. Totally wrong. Medicaid planning usually involves an Irrevocable Trust to protect assets. Revocable trusts will not make you eligible for nursing home care.

Trusts avoid probate. Assets in a trust don’t go through probate. However, it is only if the trust is funded. Assets must be immediately placed in the trust, usually through re-titling, or postmortem through beneficiary designations. Otherwise, the assets go through probate.

If my will says, “per stirpes,” my grandchildren will inherit assets if my adult children die first. This oversimplification of a complex issue is typical of estate planning myths. Grandchildren only inherit assets if the adult children die before the grandparent. If you want your grandchildren to inherit assets, you need a “bloodline” trust. An estate planning attorney will help you accomplish this.

I only need a will and a trust for my estate plan. This is another big mistake. An estate plan includes documents for incapacity and end-of-life, including Power of Attorney, Health Care Power of Attorney, Advanced Directives and a Living Will Declaration.

Reference: Insurance News Net (March 15, 2023) “Debunking the Top 10 estate planning myths”

What Should Not Be Kept in a Safe Deposit Box?

“Locking away certain valuables and important documents in a bank vault could turn into a headache for you or your heirs.”

In today’s digital world, almost everything of importance is stored virtually, in the cloud. A physical safe deposit box might seem like a throwback, but still has some good uses, says a recent article from Kiplinger, “Things You’ll Regret Keeping in a Safe Deposit Box.”

Some things belonging in a safe deposit box include prized possessions, like a valued baseball card collection or jewelry inherited from a loved one. Some important documents—but not all—should be kept in a safe deposit box.

There are many items you may regret putting in a safe deposit box, particularly if you need to access them in an emergency, when the bank isn’t open. The bank may also not be open during emergencies, including natural disasters. The COVID lockdown reduced many bank branch hours, or banks required appointments to access safe deposit boxes.

Here are some things that don’t belong in your safe deposit box:

Cash. If you need cash in an emergency and the bank is closed, you’ll have to wait. Idle money also loses buying power over time when inflation is high. A better place for the money if you don’t need it: an interest-bearing account or a certificate of deposit. Many banks also forbid storing cash in a safe deposit box. The cash has no protection from the Federal Deposit Insurance Corporation (FDIC), which insures up to $250,000 per deposit per bank. However, it is only if your money is in a checking account, savings account, or certificate of deposit.

Passport. Unless you travel internationally frequently, you probably don’t use your passport often. However, what if you score a great deal on a trip with a Monday departure—and the bank is closed until Monday morning? Or a college student on a semester abroad has an emergency and you need to jump on a plane? It’s best to have a passport at home in a secure, waterproof and fireproof safe.

Your will and other estate planning documents. Keeping copies of your will, your spouse’s will and any will in which you’re named the executor in a safe deposit box makes good sense. However, your original will does not belong there, especially if you are the sole owner of the safe deposit box. After your death, the bank will seal the safe deposit box until the executor can prove they have the legal right to access it. Settling your estate will be delayed until this is resolved.

Keep the original copy of your will either with your estate planning attorney, if they provide the service, or keep it where your executor or spouse can easily access it. Copies are fine in the safe deposit box. However, originals need to be accessible.

Final letters of instruction. Writing a letter of instruction to go along with your estate plan is smart. The letter can convey your wishes for medical care, if want to be buried or cremated and what kind of memorial service you want. However, if the letter is sealed up in a safe deposit box, your wishes will never be granted. Keep a letter of instruction with your original will and consider sending dated copies of the letter to anyone who you want to take action on your behalf or who is designed to receive a specific bequest.

Powers of Attorney. A POA gives authority to a third party to act on your behalf should you become incapacitated. If it’s locked in a safe deposit box and only you have access to the box, the person you want to protect you when you are incapacitated will not be able to help. Keep the original POA with the original copy of your will. Copies are fine for anyone who will need them. However, the original stays with your will.

Advance Directives. Much like the POA, your advance directives—living will and health care proxy—will be needed if you become seriously ill or injured or incapacitated. Without quick access to these advance directives, no one will know your wishes. Make sure that medical providers and family members have copies on hand.

Reference: Kiplinger (Jan. 4, 2023) “Things You’ll Regret Keeping in a Safe Deposit Box”

Can I Protect My Family after Death?

“The future is uncertain. However, you can ensure that your family and loved ones are taken care of with estate planning. Estate planning is a critical component of financial planning for the future.”

Estate planning involves a close look at personal and financial goals while you are living and after you have died, as explained in a recent article titled “Professional Advice: Secure your future with estate planning” from Northwest Indiana Business Magazine. Having a comprehensive estate plan ensures that your wishes will be carried out and loved ones protected.

Your last will and testament identifies the people who should receive an inheritance—heirs—who will manage your estate—executor—and who will take care of your minor children—guardian. Without a valid will, the state will rely on its own laws to distribute assets and assign a guardian to minor children. The state laws may not follow your wishes. However, there won’t be anything your family can do if you didn’t prepare a will.

Assets with beneficiary designations can be passed to heirs without going through probate. Certain assets, like life insurance policies and retirement accounts, allow a primary and secondary beneficiary to be named. These assets can be transferred to the intended beneficiaries swiftly and efficiently.

Many people use trusts to pass assets for a variety of reasons. For example, a trust can be created for a family member with special needs, protecting their eligibility to receive government benefits. Depending on the type of trust you create, you might be able to eliminate estate taxes. Certain trusts are also useful in protecting assets from creditors and lawsuits, and ensure that assets are distributed according to your wishes.

Revocable living trusts provide protection in case of incapacity, avoid probate and ancillary probate and may provide asset protection for beneficiaries. If you are the creator of a trust—grantor—you will need to appoint a successor trustee to manage the trust if you are the original trustee and become incapacitated. Upon death, a revocable trust usually becomes irrevocable. Assets placed in the trust avoid probate, the court proceeding used to settle an estate, which can be both time-consuming and costly.

A Power of Attorney allows you to name a person who will handle your financial affairs and protect assets in the event of incapacity. That person—your agent—may pay bills, sell assets and work with an elder law estate planning attorney on Medicaid planning. The POA should be customized to your personal situation. you may give the agent broad or narrow powers.

Everyone should also have a Health Care Proxy, which gives the person named the legal right to make health care decisions on your behalf if you are unable to. You’ll also want to have a HIPAA Release Form (Health Insurance Portability and Accountability Act), so your agent can speak with all health care providers, access medical records and speak with the health insurance company on your behalf.

A Living Will is the document used to convey your wishes regarding end-of-life care if you are unable to do so yourself. It is certainly not pleasant to contemplate. However, it should be thought of as a kindness to your loved ones. Without knowing your wishes, they may be forced to make a decision and will never know if it was what you wanted. A Living Will also avoids conflicts between health care providers and family members and makes a stressful time a little less so.

Having a comprehensive estate plan provides protection for the individual and their family members. It avoids costly and stressful problems arising from the complex events accompanying illness and death. Every three to five years (or when life or financial circumstances warrant), meet with an estate planning attorney to keep your estate plan on track.

Reference: Northwest Indiana Business Magazine (Dec. 27, 2022) “Professional Advice: Secure your future with estate planning”