In the latest Weekly Wright Report:
- Basic Estate Planning
Basic Estate Planning
While no one finds joy in the contemplation of their own mortality, Benjamin Franklin wrote, “nothing is certain except death and taxes.” The goal of estate planning is to prepare for the certainty of death and, by taking necessary actions, thereby lessen the difficulties faced by your surviving friends and family. While not as “certain” as death, planning for possible disability is also a part of estate planning.
Generally, basic estate planning documents include a Power of Attorney, an Advance Medical Directive and a Last Will and Testament. The Power of Attorney and Advance Medical Directive provide for an agent who is given authority to act during your lifetime if you are not capable of making your own decisions. A Last Will and Testament appoints an administrator (called a Personal Representative) and governs the disposition of your assets after your death.
The Power of Attorney allows your named agent to make financial decisions over your assets such as paying bills, filing income tax returns and managing investments. The Advance Medical Directive allows your named agent to make health care related decisions for you, such as speaking with your doctors and pharmacist, agreeing to treatment options for you, hiring nursing staff, or arranging for your stay in a rehabilitation facility, or nursing home. Having a Power of Attorney and Advance Medical Directive in place before you become disabled may avoid family infighting and avoid a potential guardianship proceeding before a judge of the Maryland Circuit Courts.
The disposition of your assets after death may be detailed in your Last Will and Testament, but there are other ways assets are transferred. For example, owning property jointly with another individual may result in the asset passing automatically to that individual, regardless of what is stated in your Last Will and Testament. Similarly, beneficiary designations on assets such as bank accounts, investment accounts, retirement plans, and life insurance policies, control the disposition of those assets regardless of what is stated in your Last Will and Testament. Coordinating the transfer of those assets in an orderly fashion is a primary purpose of estate planning. While personnel at financial institutions like banks and financial houses may suggest forms that include beneficiary designations, these documents should be reviewed with your lawyer to be certain that they match your planning goals.
If you already have these important documents in place, they may have been prepared many years ago. If you haven’t updated your documents in the last five years, you should review them to make sure they still fit your plan. The tax laws, trust laws and probate laws have changed dramatically in the last ten years.
Now is a good time to make the important decisions to protect your family. If you have any questions, please reach out to any member of the Estates & Trusts group.