The Ritter & Randolph, LLC Blog

For the New Year, Resolve to PLAN!

Erica L. Groman, Esq.

With the New Year quickly approaching, many people are brainstorming ideas for their “New Year’s Resolution.” Need some ideas? You should consider finalizing your estate plan! After all, what better way to start the New Year than planning for your future and that of your loved ones?

While many people associate estate planning with the preparation of a Last Will and Testament, estate planning involves both planning for your life and death. Planning for your life includes preparing for your possible illness, incapacitation, and incompetency. Planning for your death includes determining the disposition of your assets and ensuring the security of your loved ones – this is especially important if you have minor children.

Still not sure if you are ready to make an estate plan? While most people do not exactly “look forward” to estate planning, understanding the basic concepts often helps to make the process seem less daunting. Here are the answers to several common questions that you may have when deciding to do your estate plan.

What is a Last Will and Testament?

  • A Last Will and Testament, also called “Will” for short, details a person’s wishes concerning the disposition of their probate assets, who will manage their estate, and the care of dependents. Upon the testator’s death, the Will is admitted to the probate court, and the terms of the Will govern the administration of the probate estate.
  • Disposition of assets. Your Will should direct who will inherit the assets of your estate. In doing this, you can choose to give certain assets to particular people. Common examples of this include a grandmother designating an heirloom ring to her granddaughter, a father gifting his watch to his son, or an individual gifting their car to a friend. You can also choose to make a gift to a religious institution, school, or charity, or you can direct that your probate assets go to your Trust, discussed more below. In making a Will, you retain control of the disposition of your assets. If you do not have a Will (meaning that you die “intestate”), your probate assets will pass pursuant to state law. By executing a Will, you can maintain control over the disposition of your estate planning assets.
  • Executor to Manage Your Estate. Your Will should delegate an Executor, who is the person that you assign to settle your debts and administer the assets of your probate estate. Without a Will, the court will appoint an Administrator to administer your assets. If multiple people want to serve in this capacity, the court will hear the testimony of the applicants. This can result in contention between family members, and the court’s ultimate decision may not align with your wishes. You should designate an Executor in your Will to ensure that your estate is managed pursuant to your direction.
  • Care of Minors/Dependents. Additionally, a Will can designate a Guardian for the care of minor children in the event of the death of the children’s parents. In the event of no Guardian designation, the court will appoint a Guardian. Oftentimes disputes arise between family members over who the court should select as the Guardian. The court will hear the testimony of the applicants, and it will ultimately decide which applicant will become the Guardian. The Guardian chosen by the court may not be the person who the parents themselves would have chosen as Guardian. To avoid the court selecting a Guardian for a minor child, parents should be sure to execute estate planning documents that include a guardianship designation for any children.

What is a Trust?

  • A Trust is an entity created by the execution of an Agreement of Trust. The person or persons who execute the Trust are called the Grantor(s). Property can be transferred into the name of the Trust, and such property is then administered pursuant to the terms of the Agreement of Trust. In general, property that is transferred into the Trust prior to the Grantors’ death will not be subject to administration through the probate court. The Grantors of the Trust will nominate a Trustee or multiple Trustees to administer the Trust pursuant to the provisions of the Agreement of Trust. Oftentimes the Grantors name themselves as initial Trustees, and they serve in such capacity until their subsequent incapacitation, resignation, or death, at which point the successor Trustee takes over the administration of the assets.
  • A properly drafted Trust can offer many benefits, including but not limited to the following:

    • Avoidance of probate court for the assets contained in the Trust, which also prevents such assets from becoming public record.
    • Planning for the care and maintenance of minor children or disabled individuals.
    • Planning for the incapacity of Grantor(s).
    • Asset preservation and creditor protection.
    • Control over the disposition of assets, including the ability to specify when a beneficiary is eligible to receive assets held in Trust.
    • Minimize estate taxes in high-asset estates.
  • Depending on your family and financial situation, you may want to consider executing an Agreement of Trust as part of your estate plan.

What Health Care directives do I need?

  • In almost all situations, you should consider executing a Health Care Power of Attorney, a Living Will, and HIPAA releases.
  • Health Care POA. A Health Care Power of Attorney is a document whereby one person (the “Principal”) selects another person (the “Agent”) to make health care decisions for them if they are incapacitated or otherwise unable to make health care decisions for themselves. This is important for people of ALL ages, even those in excellent health. In fact, it is becoming more and more common for college bound young adults to execute a Health Care Power of Attorney naming their parents as Agents just in case of a medical emergency. In this example, the Health Care Power of Attorney will allow an Agent Parent to make medical decisions for the incapacitated adult child, which they otherwise would be unable to do without a court order.

  • Living Will. A Living Will is a document that only applies in very limited end-of-life circumstances. The Living Will allows a person (the “Declarant”) to set forth directions concerning the use of artificial life-sustaining treatment if the Declarant subsequently becomes terminally ill or permanently unconscious. The Living Will is only effective when the Declarant is no longer able to communicate his/her own wishes, and it trumps the Health Care Power of Attorney. If a person chooses to only execute a Health Care Power of Attorney, then their Agent is given the power to make all health care decisions, including whether or not to continue life-sustaining treatment, artificial nutrition, and artificial hydration in the event of terminal illness or permanent unconsciousness.

  • HIPAA Release. A HIPAA release form gives the individuals named the ability to obtain your protected health care information. The people named in the form are not able to make health care decisions for you unless they are also named as your Agent in your Health Care Power of Attorney. Many people execute a HIPAA release so that their family and friends can talk to a doctor in the event of an emergency.

What is a Financial Power of Attorney?

  • A Financial Power of Attorney is a legal instrument where a person (the “Principal”) selects an “Agent” to make financial transactions on their behalf. This can be particularly helpful for individuals who need assistance managing their day-to-day finances, including paying bills, depositing checks, and sorting through mail. A Financial Power of Attorney can be “durable,” meaning that it continues to be effective in the event the Principal becomes mentally incompetent. At the death of the Principal, the power granted to the Agent under the Financial Power of Attorney terminates.

A client’s estate plan is of utmost importance, and if you have not already done so, consider executing or updating your estate plan in the upcoming year. The truth is that all of us will age and eventually die, and although executing an estate plan is not something most people like to do, it can certainly make life transitions easier for you and your loved ones. While the above provides an overview of the estate planning process, there are many additional factors that need to be considered in creating and implementing an estate plan that is tailored to meet each client’s objectives. If you are interested in learning more about the estate planning process, you should consider scheduling an appointment with an estate planning attorney.

*This information is not, nor is it intended to be, legal advice. If you are seeking legal advice, you should contact an attorney. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship.*

So You Finalized Your Estate Plan. Now What?

Erica L. Groman, Esq.

Clients often express relief after finalizing their estate planning documents. However, even after all your documents are signed, there are still further steps that you should take to ensure that your affairs are in the best possible order.

  1. Store your Documents in a Safe Place. Whether you retained your original estate planning documents or copies of the documents, be sure to store what you have in a safe place! With the permission of the client, many law offices, including mine, keep the original Last Will and Testament, any original Trust documents, and original Financial Powers of Attorney for safekeeping, usually in a safety deposit box or bank vault, and the client receives a copy of the documents. Other times, the client elects to retain their original documents. In either case, a client should store their estate planning documents, whether they have an original or a copy, in a safe and secure location. In addition, the client should inform a trusted person where the documents are being kept so that they can be accessed when they are needed. If you have estate planning documents, but no one can find them, your estate planning efforts are fruitless.
  2. Talk to your Fiduciaries. When naming someone to be a fiduciary, such as an Executor of a Will, a Trustee of a Trust, the Guardian of a minor, or as an Agent through a Power of Attorney, it is important to let the person or persons named know that they have been nominated in such a capacity. Many people opt to have this conversation with the potential fiduciary before actually making the designation, but whether this was previously discussed or not, it is important that the fiduciary is aware of their potential role in your estate plan so that they can plan accordingly. Also, it is important to convey your intentions to the fiduciary so that they can carry out your plan in a manner that best meets your expectations.
  3. Distribute your Documents to Trusted Contacts. Depending on your comfort level, you may want to consider distributing copies of your documents to certain trusted individuals. For example, it is wise to provide your physician’s office with copies of your health care directives so that this information is accessible in the event of your hospitalization or a medical emergency. For other documents, such as your Last Will and Testament, any Trust Instruments, or Financial Powers of Attorney, only distribute copies of these documents to a trusted person if you are comfortable doing so.
  4. Make Lists for your Executor. Being a fiduciary, especially an executor, trustee, or financial power of attorney, is not an easy task. However, by making these three lists, you will be providing your fiduciary with the resources to effectively and efficiently manage your affairs.
    1. List of Assets & Their Location. Keep a list of the assets that you own. This will serve as the framework for an executor, trustee, or financial power of attorney of the assets that will need to be managed. If possible, include information for where each asset is held and any identifiers, such as account numbers, associated with the asset.
    2. List of Passwords. I know from my own experience that this is not an easy feat. When trying to create my own list of passwords, I was surprised at how many accounts, especially online accounts, I have in my name. This includes accounts for email, professional, medical/health, social media, shopping, education, bank/financial, expenses, utilities, entertainment, children, pets, and other purposes, to name a few. And of course, all of these accounts have associated user names, email addresses, and passwords. While creating a list of passwords may be a tedious task, by making this information accessible to your fiduciaries in the event of your incapacitation or death, you will enable them to promptly attend to your affairs.
    3. List of Contacts. Does your fiduciary know who to contact in case something happens to you? By making a list of the names, addresses, phone numbers, and email information of important contacts, you are providing your fiduciary with a valuable resource to efficiently manage your affairs. Individuals that you should consider adding to this list include close family members, fiduciaries and beneficiaries named in your estate planning documents, doctors, attorneys (especially your estate planning attorney), financial advisors, and accountants.
  5. Update your Beneficiary Designations. While your Last Will and Testament governs the disposition of certain “probate” assets, some assets, deemed as “nonprobate” assets, will pass according to their beneficiary designations. This is true for certain retirement accounts, investment accounts, and life insurance policies where beneficiary designations have been made. Be sure to review these designations regularly to ensure that they meet your intent. If you have a Trust in place, you should work with your attorney to ensure that your assets are properly funded to your Trust.
  6. Perform Periodic Reviews. Even after you complete the above steps and get your affairs in tip-top shape, it is important that you review your estate planning documents on a regular basis. Any life-changing event, such as a marriage, birth of a child, divorce, disability, or death should trigger a review of your estate plan. In the absence of such an event, you should still consider reviewing your documents every few years to ensure that they still meet your current intent. If after reviewing your estate plan you have questions or concerns, you should schedule an appointment with your estate planning attorney to discuss your case and to make any necessary modifications. Be sure to always seek legal advice before marking up or disposing of your current documents so that you are aware of the legal ramifications of your actions!

*This information is not, nor is it intended to be, legal advice. If you are seeking legal advice, you should contact an attorney. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. *