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Astoria Strategic Wealth

Estate Planning - Getting Your Ducks in a Row

“Even though I have a big presentation to give at work today, it’s my mother’s birthday, and I promised to coach my daughter’s soccer practice tonight, I think I’d really like to take a top-down look at my overall estate plan today,” said no one ever.

You are not alone. Few of us like to face our mortality or imagine a time when we won’t be able to care for our loved ones. Not doing so, however, is a disservice to them. Take it in manageable bites, and stay committed to your best intentions. We can help.

You can begin by simply thinking about two basic components of material that your successors will need. The first is a set of legal documents that are needed to help process your property. The second component is knowledge and access to information that will help your loved ones clearly understand and follow through on your wishes.

Let's Get Started - The Legal Document Set

Wills and trusts are two of the most popular estate planning tools. Both allow you to spell out how you would like your property to be distributed, but they also go far beyond that.

Just about everyone needs a will. Besides enabling you to determine the distribution of your property, a will gives you the opportunity to nominate your executor and guardians for your minor children. If you fail to make such designations through your will, the decisions will probably be left to the courts. Bear in mind that property distributed through your will is subject to probate, which can be a time-consuming and costly process.

Trusts differ from wills in that they are actual legal entities. Like a will, trusts spell out how you want your property distributed. Trusts let you customize the distribution of your estate with the added advantages of property management and probate avoidance. While trusts offer numerous advantages, they incur upfront costs and ongoing administrative fees. The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of an experienced estate planning professional and your legal and tax advisers before implementing such strategies.

Wills and trusts are not mutually exclusive. While not everyone with a will needs a trust, all those with trusts should have a will as well.

Incapacity poses almost as much of a threat to your financial well-being as death does. Fortunately, there are tools that can help you cope with this threat.

A durable power of attorney is a legal agreement that avoids the need for a conservatorship and enables you to designate who will make your legal and financial decisions if you become incapacitated. Unlike the standard power of attorney, durable powers remain valid if you become incapacitated.

Similar to the durable power of attorney, a health care proxy is a document in which you designate someone to make your health care decisions for you if you are incapacitated. The person you designate can generally make decisions regarding medical facilities, medical treatments, surgery, and a variety of other health care issues. Much like the durable power of attorney, the health care proxy involves some important decisions. Take the utmost care when choosing who will make them.

A related document, the living will, also known as a directive to physicians or a health care directive, spells out the kinds of life-sustaining treatment you will permit in the event of your incapacity. The directive creates an agreement between you and the attending physician. The decision for or against life support is one that only you can make. That makes the living will a valuable estate planning tool. And you may use a living will in conjunction with a durable health care power of attorney. Bear in mind that laws governing the recognition and treatment of living wills may vary from state to state.

Naming of Agents - Choose Wisely!

  • Agents have a fiduciary responsibility to you and your estate. This is a legal standard for the care with which they must make decisions or face culpability.
  • Being an agent, while considered an “honor” can also be taxing from a time, effort and emotional perspective. Consider your agent’s ability and willingness to take on this responsibility; be sure to have a discussion with them to help them understand the commitment level that will be required.
  • Consider avoiding “co-agent” situations when naming agents. Naming a single (or odd-number of agents) avoids issues of disagreement due to equal votes.
  • Consider naming an institution, law firm, or an accounting firm as the last in the succession of agents to avoid a court petition if none of the other agents are able/willing to serve.

The Non Legal Documents to consider:

In addition to the legal document set described above, you may also consider a Letter of Instruction and an Ethical Will.  We have separate entries in our blog for these topics.