What is it?  Why Should I do it Now? 

Estate planning refers to the process and documentation needed to dispose of your assets at your death.  It also includes planning in the event that you are incapacitated during life.

A core estate plan typically consists of a Will or Revocable Trust, a power of attorney and a health care directive.  All clients start with these basic building blocks.  Depending upon the size and complexity of your estate, your estate plan may also include other documents, such as a trust to own life insurance.

1.  Who needs an estate plan?

• Anyone who wants to direct where their assets go at their death.  If you die without a Will and you have a spouse and children, your spouse does not necessarily receive all of your assets.
• Anyone who wants to select the agents who will act for him or her –i.e., the Personal Representative and/or Trustees, and the guardians for minor children.
• Anyone in a non-traditional relationship.
• Anyone with minor children.  Not only are you able to name guardians for your minor children, but you can also include trust provisions so that the children do not receive all of your assets at age 18 or 21.
• Anyone with a disabled child or beneficiary.
• Anyone who owns a business.  You want to make sure that you have a smooth transition of the business ownership when you die.
• Anyone who has a taxable estate for state or federal purposes.  Without the proper planning in the documents, you may lose some or all of your tax exemptions.
• Anyone who wants to leave a gift to a charity or a non-family member.
• Anyone who is not a US citizen or has a non-citizen spouse.
• Anyone who owns property in multiple states.
• Anyone who wants to avoid costly court proceedings to have a guardian appointed in the event of disability.

This list is not exhaustive, but most people fall into one of these categories.

2.  I am in the middle of a huge life transition, why is it important now to update my estate plan?

As families change through marriage or divorce, birth of children and children attaining adulthood, your estate plan will need to change to fit the new facts.  This is also the case if your financial situation changes significantly.  It is likely that both of these things are happening right now.

If you have implemented an estate plan in the past, a divorce will remove your ex-spouse from your Will.  However, once that happens, you may not have a beneficiary named, which would have the same result as having no Will at all.  If that is the case, your assets may not end up with the people you want to receive them.  You will want to examine any provisions that you have made for your children.  You may need to coordinate them with any support obligations that may continue even if you die.  If you have young children, trusts should be set up for their benefit in your Will.  Not only does this protect the funds from your ex-spouse, but it also ensures that the children receive the funds at the ages that you have selected, instead of age 18 or 21.  You can select the trustee who is the person who will make distributions from the trust to care for your child.  You also name guardians for the children in the Will.

You will want to implement a Power of Attorney.  This document authorizes the person you choose as your agent to conduct your financial affairs for you in the event that you become incapacitated.  Having a Power of Attorney avoid the need to go to Court to have a guardian appointed to transact your financial affairs if you are incapacitated.  The Power of Attorney authorizes your agent to undertake tasks such as signing checks, tax returns and real estate documents.

A Health Care Directive allows you to appoint someone to make medical decisions for you if you are unable to do so.  The document also allows you to set out your wishes about your medical treatment if you are terminally ill.

Lastly, you will want to check the beneficiaries on all retirement accounts (401ks, IRAs and pensions) and life insurance to make sure that they are current.  While a divorce will automatically remove your ex-spouse as a beneficiary under the Will, it does not negate the beneficiary designation on these types of assets.  If you are required to maintain life insurance on your life for the benefit of an ex-spouse or children, we can discuss the best way to structure the ownership of the insurance.

Although you are undergoing a major transition, this is precisely the time that it is important to review the status of your estate plan to ensure that you have the necessary documents to protect yourself and your desired beneficiaries.