Tips, Tricks and Essentials of Estate Planning (PART 2)

Cathy R. Robinson, CPA
Senior Manager
robinson@hwco.com
 

In Part 1 of Tips, Tricks and Essentials of Estate Planning the four essential documents the CPAs and advisors at HW&Co. most recommend were covered. To recap the list, the essentials were having a will, having durable power of attorney, medical power of attorney, and finally, a directive to physicians or a living will.

So what else can you do to better prepare yourself for planning your estate?  There are additional highly recommended items you should look into. They are: 

A  Trust

You should create a trust while you are alive. Finding a reliable, trustworthy trustee is the second step. This person will manage the property according to legal duties and your instructions. They distribute the assets to the beneficiaries according to your instructions.  So why invest in a trust? The first reason is so that it can help you to provide for and protect a beneficiary. Secondly, the flexibility of asset distribution can help to spread benefits over time. Your instructions will govern who receives the assets of the trust and the amount they receive, while also setting standards and conditions. Finally, a trust can help to protect against your own incompetence. Should something happen with your mental state the trust will already be in place with clear concise orders to help take care of your loved ones.  

It’s important to also be aware that while trusts can be very helpful, they are not always worth the cost, expense and hassle that come with them. You should also look out for the trust “seminars” sponsored by companies claiming to prepare trusts. These people are often not licensed attorneys. Avoid the scam and seek out a professional.  

Self-Designation of Guardian

With this document, you can name the person whom you would want appointed to be in charge of your minor child(ren.) A guardian is the person who will be legally responsible for the personal affairs, health, and well-being of a minor. In some states, you can also disqualify people you do not want appointed.  

Organ Donation

If you are someone who would like to donate your organs, you should have clear documentation and instructions. This can be as easy as going to the DMV to have it placed on your driver’s license. If you do not make this decision for yourself, your family will reserve the right to make the decision for you.  

There never seems to be an ideal time to plan your estate, but it is important to have a plan. These useful documents can help to make things easier on your loved ones, while ensuring your wishes are being carried out accordingly. It is also recommended to seek professional advice as to meet your goals.    

Tips, Tricks and Essentials for Estate Planning (PART 1)

Cathy A. Robinson, CPA
Senior Manager
robinson@hwco.com
 

In this two part series, we have compiled a list of essential documents, as well as the highly recommended documents, for Estate Planning.  Though you may think you can wait to plan, our advisors recommend starting sooner rather than later.   

Estate planning can be complicated.  It is important you know all the essential tips, tricks, and documents to can help make planning easier on you and your relatives. What are the essential documents that you will need for planning your estate?  

1.)    A Will

Having a will is the first and most important step.  In your will you must clearly and carefully describe the beneficiaries and the property and or assets they will receive. This means identifying their exact name and relationship to you, as well as the property and or asset. Keep in mind a stranger should be able to go into your home and find the item based upon the provided description.

 

This is especially true for heirlooms. They should be specifically left in the will and described carefully. Relying on markings, an informal list, or the idea your children know what you want is a bad rule of practice. Most disputes which occur between family members are over heirlooms. Another good idea is to give the item to the person while you are still alive.

DO NOT give reasons for your actions in your will. Reasons can be used to show a lack of capacity and have the potential for testamentary libel.

The most important part of creating a will is naming a trustworthy executor. This person will carry out your will when you die, pay your debts and distribute property to your beneficiaries. They should also be appointed by a court first. The executor should be honest, have sound judgment, be financially responsible, and be close in proximity. 

2.)    Durable Power of Attorney

You must name a power of attorney to manage your property in the event you are unable to do so yourself. This means this person will have the responsibility of doing things such as paying your bills, maintaining your house, managing your investments, etc.  When selecting this person, they should have experience and skill, good trustworthy character, and are close by.

3.)    Medical Power of Attorney

This person will be the one is responsible for making all of the medical decisions for you in the event you are unable to do so yourself.  It is important to explain in this document the types of decisions they will face such as: “pulling the plug,” what treatments you do and do not desire, forced food and water administration.  When selecting this person, remember they may be making life and death decisions, so you will want to choose wisely. Spend time with this person going over your wishes and consider naming alternates.

4.)    Directive to Physicians (“Living Will”)

This statement will alert the doctor as to whether or not you desire to be kept alive artificially when you are in an irreversible or terminal condition and cannot express your own desires.  This statement differs from the medical power of attorney because it directly expresses your wishes. In your document, include your detail desires for things like artificial nutrition and hydration, as well as antibiotics.