If you have an estate plan in place you are actually among a minority of Americans. That’s correct, even though death is widely understood as one of the proverbial two inevitable facts of life, the majority of American adults have not executed all of the necessary estate planning documents.
There are those who have taken a single step along the way. Perhaps you had a last will drawn up when you had your first child, or when you got married.
This does not mean that you are completely prepared for the eventualities of aging and your eventual death. Everyone should have a thorough estate plan in place that addresses the contingencies that you may face during the latter stages of your life, the period that people refer to as the “twilight years.”
Transferring Your Assets
Arranging for the transfer of your assets may require more than just a simple last will. For one thing, an estate must be probated when a last will is used to direct asset distributions. The resources won’t be passed on to the heirs until this legal process has run its course.
How long will probate last? Depending on the exact circumstances it could take a number of months or even a number of years.
To avoid probate you could convey assets into a revocable living trust. If you do this the trustee that you select will distribute the assets to your beneficiaries in accordance with your wishes as stated in the trust agreement.
Revocable living trusts are good for avoiding probate, but they don’t provide tax efficiency, and they don’t protect assets. If you want to shield assets from creditors, claimants, and former spouses you will want to go in a different direction.
You can also take various different steps to enable tax efficient asset transfers to your loved ones.
Medical Decisions
Most people don’t die one day after being perfectly healthy for the period of time leading up to the fateful event. To account for the possibility of incapacity you should state your choices regarding the possible utilization of artificial life-support measures in a living will.
It is possible that decisions could become necessary that are not specifically addressed in the living will. As a result you should execute a health care proxy or durable power of attorney for health care. With this legal instrument you name someone who can legally make medical decisions in your behalf.
Financial Decisions
There is also the matter of financial decision-making. If you become incapacitated someone must handle your affairs.
If you use a revocable living trust you may select a successor trustee who would manage the funds. You could also create a durable power of attorney for financial decision-making and appoint a handpicked attorney-in-fact.
Paul A. Kraft, Estate Planning Attorney
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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