Estate planning can be an uncomfortable reminder of mortality, but it is a necessary milestone that all competent adults must complete in order to preserve their hard-earned assets and property for future generations. The following are our top seven tips for anyone considering implementing an estate plan or making changes to an existing portfolio.
Tip 1: Jump right in
As mentioned above, estate planning can be uncomfortable, and there will definitely be discussions concerning end-of-life decisions, dividing property among children, and pre-planning for mental incompetency. However, putting it off any longer will not do you or your children any good in the long run.
If you are nervous about the process, rest assured a competent estate planning attorney will be able to help ease you through the conversation and will have the final documents ready for execution in a matter of weeks.
Tip 2: Consider avoiding probate
Probating property is a laborious and expensive process that an individual can easily avoid with the use of a revocable living trust. With the creation of a trust, trustors can place any titled property they like in the name of the trust. When the trustors pass away, the property will pass according to the terms of the trust agreement, and the trustees will not need to engage in the probate process to transfer ownership from the deceased to the beneficiary.
The revocable trust is a great option for anyone looking to streamline the process for his or her heirs, and it can help save valuable estate assets as well.
Tip 3: Do not forget the POA
A durable power of attorney (POA) for finances is an essential component to a comprehensive estate plan. A POA creates an agency relationship between the creator and the individuals he chooses as agents. An agency relationship means that the person with power of attorney (agent) has the authority to make decisions on the behalf of the principal (the person who grants the agent power of attorney).
Once executed, the agents may use the POA to help the principal conduct financial and legal matters. Most importantly, the durable POA survives past the creator’s point of incapacity, eliminating the need for costly guardianship proceedings.
Tip 4: Start thinking about a medical POA
Like a financial POA, a medical POA creates an agency relationship between the creator, or principal, and the individuals he chooses as agents. A medical POA is necessary in preparing for an event, such as a catastrophic illness or injury, and comes into play when the creator is no longer able to advocate for himself to make medical decisions.
If the creator is able to understand the situation and advocate for himself, he can do so despite the existence of the POA. However, if the creator reaches a point of incapacity or is otherwise unable to communicate, a medical POA with carefully selected agents becomes an irreplaceable component to the patient’s treatment.
Tip 5: Consider the living will
A living will is probably the most uncomfortable estate planning document to consider, as it deals strictly with end-of-life issues. Specifically, a living will directs the ways in which the creator wants doctors and the family to treat him in the event he is facing an end-of-life, terminal situation. In most cases, the directives will not trigger until at least one physician has declared that the patient is highly likely to succumb to the effects of his accident or injury, and death is imminent.
The living will is also useful if a patient is in a persistent vegetative state (coma) and is alive solely via life-support machines. In the living will, the creator must decide whether he or she prefers not to be resuscitated (known as a “DNR”), whether he or she would like artificial hydration or a feeding tube, the extent of pain medication to administer, and whether he or she plans to be an organ donor post-mortem.
Tip 6: Gifts
In many cases, testators wish to give specific gifts to specific people, and they believe they can rely on good faith conversations to make these wishes. As knowledgeable estate planning attorneys, we can attest that this is not always the case, and priceless heirlooms often wind up in the wrong hands without a properly drafted estate plan.
If you are considering cash gifts or gifts of personal property (e.g., jewelry or artwork), be sure to include this information in your estate plan to clearly communicate exactly who is supposed to receive which gift.
Tip 7: The taxman cometh
We already discussed death, so now let’s discuss taxes. Certain estates with a substantially high net worth could face unthinkable estate taxes if an individual does not take proper precautions during the estate planning process. There are a number of creative ways to minimize estate taxation, including life insurance trusts and credit shelter trusts, to name a few.
If your estate is likely to reach $5.45 million or more in net worth, be sure to consult with an Ohio estate planning attorney right away to discuss your options before it is too late.
Contact Lovett & House Co., LPA Today
For help with your estate plan, please contact Lovett & House Co., LPA in Ohio today at 937-667-8805.
