While
nobody wants to think about death or disability,
establishing an estate plan is one of the most important
steps you can take to protect yourself and your loved
ones. Proper estate planning not only puts you in
charge of your finances, it can also spare your loved
ones of the expense, delay and frustration associated
with managing your affairs when you pass away or become
disabled.
Providing for Incapacity
If you
become incapacitated, you wont be able to manage your
own financial affairs. Many are under the mistaken
impression that their spouse or adult children can
automatically take over for them in case they become
incapacitated. The truth is that in order for others to
be able to manage your finances, they must petition a
court to declare you legally incompetent. This process
can be lengthy, costly and stressful. Even if the court
appoints the person you would have chosen, they may have
to come back to the court every year and show how they
are spending and investing each and every penny. If you
want your family to be able to immediately take over for
you, you must designate a person or persons that you
trust in proper legal documents so that they will have
the authority to withdraw money from your accounts, pay
bills, take distributions from your IRAs, sell stocks,
and refinance your home. A will does not take effect
until you die and a power of attorney may be
insufficient.
In
addition to planning for the financial aspect of your
affairs during incapacity, you should establish a plan
for your medical care. The law allows you to appoint
someone you trust - for example, a family member or
close friend to make decisions on your behalf about
medical treatment options if you lose the ability to
decide for yourself. You can do this by using a durable
power of attorney for health care where you designate
the person to make such decisions. In addition to a
power of attorney for heath care, you should also have a
living will which informs others of your preferred
medical treatments such as the use of extraordinary
measures should you become permanently unconscious or
terminally ill.
Avoiding Probate
If
leave your estate to your loved ones using a will,
everything you own will pass through probate. The
process is expensive, time-consuming and open to the
public. The probate court is in control of the process
until the estate has been settled and distributed. If
you are married and have children, you want to make
certain that your surviving family has immediate access
to cash to pay for living expenses while your estate is
being settled. It is not unusual for the probate courts
to freeze assets for weeks or even months while trying
to determine the proper disposition of the estate. Your
surviving spouse may be forced to apply to the probate
court for needed cash to pay current living
expenses. You can imagine how stressful this process can
be. With proper planning, your assets can pass on to
your loved ones without undergoing probate, in a manner
that is quick, inexpensive and private.
Providing for Minor Children
In
your estate plan, you should also address issues
regarding your childrens education. If you have young
children, you may want your surviving spouse to have the
option of not being employed so that he or she can
devote more attention to your children. If your spouse
is inexperienced in financial matters, your estate plan
should provide for assistance with financial management,
such as setting up trusts. In addition, your estate plan
should consider the consequences of both you and your
spouse dying simultaneously. If you have minor children,
you will want to select someone to manage your assets
for their benefit as opposed to leaving this decision
with the court. In this situation, your estate plan
should also address when your children will receive your
assets outright, free of trust. All too often,
children receive substantial assets before they are
mature enough to handle them properly, with devastating
results.
Even
more pressing than financial matters is the issue of
selecting legal guardians who will raise your children
if you and your spouse die prematurely. You should give
careful thought to your choice of guardian, ensuring
that he or she shares the values you want instilled in
your children. You will also want to give consideration
to the age and financial condition of a potential
guardian. Some guardians may lack child-rearing skills
you feel are necessary. Make sure that your plan does
not create an additional financial burden for the
guardian.
Planning for Death Taxes
No
matter how overtaxed you think you are during life,
Uncle Sam will want to review your estate at death to
ensure you dont owe him that one final tax: the federal
estate tax. Whether there will be any tax to pay
depends on the size of your estate and how your estate
plan works. Many states have their own separate estate
and inheritance taxes that you need to be aware of.
There are many well-established strategies that can be
implemented to reduce or eliminate death taxes, but you
must start planning process early in order to implement
many of these strategies.
Charitable Bequests
Do you
have a favorite cause, charity or religious
organization? You can use your estate plan to provide
assistance for such organizations, either during your
life or at your death. This is one of the few instances
in which our government actually provides you with
incentives to do so.
The
ultimate benefit of a well-crafted estate plan is that
it provides for your loved ones in an effective and
efficient manner by avoiding guardianship, probate,
estate taxes and unnecessary delays. It will lessen not
only your own stress, but also that of your loved
ones. It's worth the time, effort and expense.
Palm Harbor
Estate Planning Attorney - Lawyer providing professional
Estate Planning Legal Services in
Palm Harbor, Clearwater, Tampa, St. Petersburg and throughout
the Southwest Florida area.
