By: Attorney Amanda N. Follett, Schloemer Law Firm, S.C.
This article was originally published in the Kewaskum Statesman and the Campbellsport News, February 1, 2018.
Establishing an estate plan is both an investment for yourself, and for your family. You have spent your life caring for your family, cultivating relationships, and accumulating assets. An estate plan will ensure your wishes are fully and faithfully honored if and when it becomes necessary. Specifically, having an estate plan helps guarantee that you, your spouse, and your children are protected, assets will go to your intended recipients, and your estate will be settled with the smallest administrative burden on your family and least cost.
Without your estate plan, you are relying on the court system to make decisions for you. This is a costly financial mistake, and there is no guarantee a court will make the decisions you would have wanted for your family. For example, if you do not have a Will naming a Guardian for your minor children, how comfortable are you with a court deciding who should have custody of your children?
The earlier you begin thinking about estate planning, the better. An estate plan should not be an end-of-life consideration, but rather it should be something you think about throughout your life and adapt as the years pass. There are some documents that every adult over the age of 18 should have (for example, a power of attorney for health care decisions in case of an accident), while the need for other documents depends on your situation.
Here are some basics to keep in mind as you get started:
Living Will/Health Care Power of Attorney
These documents permit you to state your wishes and name someone to make health care decisions for you if you should become incapacitated, whether temporarily or permanently. More specifically, a “Living Will” informs health care providers of your wishes about life sustaining treatment in cases of a terminal condition or persistent vegetative state, while a “Health Care Power of Attorney” designates one or more persons to make health care decisions on your behalf, should you become unable to make those decisions.
Difficult choices need to be made on your behalf following a serious illness or injury. If someone has not been granted authority to make them, restrictions and confusion will only make a difficult situation worse. A guardianship proceeding would be required, under which a court would appoint a guardian for you. The appointment of a guardian is time consuming and expensive. The person appointed by the court to be your guardian will not necessarily be the person you would choose for the job. Putting these documents in place is essential to ensure that loved ones can make the most important decisions about each other’s care.
Everyone over the age of 18 should have a Living Will/Health Care Power of Attorney. Even if you are young and healthy, you should think about who you want to represent you in case of the unexpected. If you have children who are 18, they should have these documents in place. Once someone turns 18, they are legally an adult, and parents cannot make health care decisions for them without these documents.
Durable Power of Attorney for Finances
At some point, you may be unable to make important decisions to manage your affairs, either temporarily or permanently. A Durable Power of Attorney gives someone you trust the right to make important decisions and act on your behalf, such as making sure bills are paid and assets are managed, invested, etc.
Without this document in place, it may be difficult, expensive, or even impossible for your loved ones to act on your behalf, and a court proceeding to appoint a guardian may be required. The person appointed by the court to be your guardian will not necessarily be the person you would choose for the job.
Everyone over the age of 18 should have a Durable Power of Attorney to name someone to legally act for them. Parents have no legal authority to act for adult children without this document.
Wills and Trusts
A Will or Trust can help ensure financial stability and security to protect your loved ones after you pass. The main purpose of a Will or Trust is to distribute your assets, name Guardians for minor children, and name the individual who will oversee the administration of your estate.
You will need to determine who you want to leave your assets to, whether it be too specific individuals or organizations. You also need to determine if there are specific assets you want to go to specific individuals. Keep in mind both who you want to benefit and who will depend on the support of your estate after you are gone. Sometimes we treat our children equally, sometimes certain children may need more assistance than others, and sometimes certain children have earned more than others because they assisted you during lifetime or worked in a family business or on the family farm.
You should also consider how your assets will be distributed. In some cases, assets should be held in trust for a child until they reach a more mature age, or even for lifetime. The appropriate age is largely a personal decision, but many find age 25 (or older) to be a good starting point.
If you have minor children, you will need to appoint a Guardian for your children in your Will. This is one of the most important aspects of an estate plan. Without this safeguard, a court would determine who would care for your children, and there is no guarantee that the person chosen by the court would be the same person you would choose for this important job.
Whether you utilize a Will or Living Trust to accomplish your objectives will depend on your specific situation and objectives, and this decision should be reviewed with an experienced estate planning attorney. Generally, a Living Trust provides advantages over a Will, including privacy and the elimination of probate proceedings and fees.
Beneficiary Designations
Beneficiary designations should be consistent with your estate plan. Life insurance and retirement plans typically pass by beneficiary designation. If an asset has a beneficiary designation, the beneficiary designation will control distribution of that asset, even if the beneficiary designation is inconsistent with your Will.
Moving Forward
Unless you put these protections in place early and for all your loved ones, you can’t feel fully confident that you are protected in case of the unexpected. Often, individuals do not put in place a plan because either the conversation is difficult or they are unsure of the decisions they wish to make. The simplest way to overcome these obstacles is to set up an appointment with an experienced estate planning attorney, who can help you have these conversations and guide you through the process.
More Important Reading
- Legal Consequences of Dying Without a Will
- Protection for Your Kids: Will vs. Living Trust
- Estate Planning for Millennials
Disclaimer: The information contained in this post is for general informational purposes only and is not legal advice. Due to the rapidly changing nature of law, Schloemer Law Firm makes no warranty or guarantee concerning the accuracy or completeness of this content. You should consult with an attorney to review the current status of the law and how it applies to your unique circumstances before deciding to take—or refrain from taking—any action. If you need legal guidance, please contact us at 262-334-3471 or [email protected].