Estate planning is a topic that many people do not discuss until later in life; however, estate planning is important for people regardless of age in order to properly plan for emergencies. Estate planning involves planning a comfortable future for yourself and your loved ones. This includes planning for the inevitable and planning for unforeseen events. There is no one size fits all approach; every estate is different. Here are some answers to the most common estate planning questions:
Why should you have an estate plan?
- An estate plan can provide security and peace of mind upon death. An estate plan ensures that your personal affairs and assets are handled in accordance with your wishes and avoids the necessity of opening a probate case to distribute your assets. Estate plans also allow for you to protect your children and have a say in who may be their guardian upon your death. A properly drafted estate plan can also shield your assets from taxes and divorce.
What is probate?
- Probate is the name of the legal process that one must undertake in order to transfer a deceased person's property after their death. The county probate court appoints a personal representative to administer the estate and distribute property in accordance with the decedent's will or, in the absence of a will, in accordance with state law. Probate should be avoided when at all possible: it's costly, your loved ones have less control over the process, it is a public record and lacks privacy, and it takes between 6-12 months to complete.
What is a will?
- A will is a legal document that allows you to direct your personal representative how to carry out your last wishes concerning your personal items, funeral arrangements, and distribution of your assets. A will, by itself, does not avoid the necessity of opening a probate estate in order to distribute your assets.
What is a trust?
- A trust is a legal document that names a trustee to carry out your last wishes and distribute your assets. A trust is different than a will in that it helps your loved ones avoid probate, can protect government benefits, may avoid estate taxes, and allows you to have more control over how and when your assets are distributed.
What is a power of attorney?
- A power of attorney is a legal document where you give a person the ability to make decisions on your behalf if you become incapacitated. The two common types are financial and medical powers of attorney. These documents would allow your designated person to make medical decisions for you or handle your finances while you're incapacitated. You can have one person for both positions or name a different person for each position. Every estate plan should have powers of attorney.
These are some of the most common questions regarding estate planning. Ultimately, every estate plan should be tailored to a client's specific personal and financial needs. If you have more questions, or would like to schedule a consultation regarding your estate plan, call Breeda K. O'Leary at (248) 380-9976 or email her at [email protected].