Basic Estate Planning

As the holiday season nears every year, and families begin to gather, I get one question more than any other – “Do I need a Last Will and Testament?”  My response is typically along the lines of “If you think you may die someday, then chances are you need a Will.”  Although my response may have a touch of sarcasm included, the thought is true as none of us will live forever.  Along those lines, I wanted to provide just a bit of information on the most basic fundamentals of estate planning for those approximately 66% of Americans who do not have a Will.  While some individuals will require much more extensive estate planning due to assets, disability or some other unique situation, the following components make up a basic estate planning package that works for most individuals.

Traditional Last Will and Testament – The Last Will and Testament of an individual includes many basic components, including your identity, a statement that this is your Last Will and Testament, and your location (such as county and state).  Within the Will is also your statement of where your property goes when you pass.  Oftentimes this can simply be “to my spouse” or “to my children, share and share alike.”  The requests do not need to be complicated, and in fact I think it is better when they are not.  Some specific bequests may also be included, such as “my grandfather’s watch to my son” or “my wedding ring to my daughter.”  Your Will also designates an Executor who will be responsible for ensuring that your last wishes (as listed in your Last Will and Testament) are carried out per your instructions.

However you choose to dispose of your property in your Will, it is important to be extremely specific and to do your best to include all of your assets.  As such, there is usually a catch-all statement that says “all other property of any kind shall go to …”  It is important to note here that assets you may have where you have already designated a beneficiary (such as a life insurance policy or retirement account) are not changed by your will.  To change beneficiaries in such instruments you will need to complete a change of beneficiary form with the service provider for that instrument (i.e., the life insurance company). 

Finally, Wills may have other important wishes included, such as preferences for burial or cremation, location for remains, and special requests to family members or loved ones.

Medical Power of Attorney – As people age and need increased medical care (and assistance in getting that medical care), or if someone suffers a devastating medical issue such as a stroke or illness that impairs their cognitive functioning, this document is vital.  The Medical Power of Attorney designates the person (or persons) you want to make medical decisions for you when you are unable to.  This gives your healthcare providers the ability to speak to and take instructions from the person you designate. 

The Medical Power of Attorney is a simple form, but when you do not have one, it can cause your loved ones a tremendous amount of stress and frustration in trying to get you medical care when you need it and can often lead to family conflict about how care is to be provided. 

Durable Power of Attorney – I tend to refer to this as a financial Power of Attorney, as it designates who can make money management decisions for you, complete your taxes, and pretty much do anything in regards to your money and finances.  If you are hospitalized for weeks or months, or need long term care, who is taking care of your finances?  This simple document can answer that question, and again provide great comfort to you and your loved ones. 

Advanced Directive – Most individuals do not like the thought of being in a comatose state or being kept alive “by machines”.  However, if that does happen, this document will express your desires as to what care you shall receive (for example, discontinuation of ventilators or life sustaining devices).  Not having a document such as this in place can create an incredible amount of stress for family members having to try and decide what you would have wanted.

In conclusion, while all of us are incredibly busy (especially during the holidays), the number one mistake that people make with a Last Will and Testament is very simple … not having one at all.  Listed above are just the basic components of an estate package and some estates can (and need to be) much more detailed with additional legal assistance such as setting up a Trust(s). The reality is that basic estate planning can be a simple process, does not need to be overly expensive, and most will feel relieved when it is completed. 

If you are one of those individuals with no estate planning in place, think about preparing those documents so that YOU are the one who decides where all of your assets (that you have worked so hard for all of your life) are distributed the way that YOU would want them to be.