Introduction
Everyone needs an estate plan. Whether you’re rich or poor, married or single, have a house full of kids or an apartment full of cats is irrelevant — a failure to plan is a plan to fail.
The good news is that it’s easy to set up a basic estate plan. You’ll need an estate planning attorney to prepare the necessary legal documents and answer your estate planning questions, but it’s quicker and more affordable than you think. In the end, it’s worth a small investment of time and money to ensure your wishes are known and your loved ones will be properly cared for.
What is an Estate Plan?
In its simplest form, an estate plan is a road map for others to follow when you’re not able to express your wishes and preferences in person. The most obvious circumstance is when you pass away, providing direction on how to handle your funeral, care for your dependents, and transfer your assets to beneficiaries. A proper estate plan should also address what will happen if you become incapacitated. Who has the right to act on your behalf to sign legal documents, cash paychecks, and pay your bills? What treatment options would you approve or deny when this individual confers with your healthcare providers?
In short, a basic estate plan should answer important questions today that may be asked in the future, and establish one or more trusted individuals to handle the matters that you didn’t directly plan for. Don’t worry about what happens if you change your mind or your life circumstances change — you can always adjust and adapt your estate plan when necessary. The important thing is to set up a basic estate plan today in case the unexpected happens tomorrow.
How to Set Up an Estate Plan
Let’s start by addressing one of the first questions on people’s minds — “do I need an estate planning attorney?” While some individuals with limited assets and a simple estate may be able to get away with a DIY approach, it helps to work with an experienced estate planning attorney who can guide you through the process and ensure you end up with the best possible plan. Even the simplest estate plans have special issues that require expert assistance. At the very least, a good attorney can make the process much easier than if you were to try it on your own.
With that in mind, the first step in the estate planning process is to find a suitable estate planning attorney. Experience and expertise are relevant, but it’s even important to find someone you’re comfortable working with. When you meet with a prospective attorney for an introductory consult, ask yourself if you can see yourself working with this attorney, sharing private information and trusting them to secure your most valuable possessions. Be sure to ask about their fees, and feel free to shop around to ensure they’re offering fair rates.
Once you’ve found a suitable attorney, the two of you will begin working on your estate plan. For the purpose of our discussion today, a basic estate plan includes the following pieces:
Durable Power of Attorney
A durable power of attorney legally authorizes an agent to act on your behalf. You can choose to authorize your agent immediately, or place a contingency that power is only granted when you become mentally incapacitated. In either case, this individual — your spouse, an adult child, a parent, a close friend, or a trusted advisor — will have the requisite authority to manage your financial accounts, sign legal documents, pay your bills, and ensure everything runs as smoothly as if you were running things yourself.
Advance Healthcare Directive
Sometimes referred to as a living will, an advance healthcare directive clearly stipulates your healthcare preferences on important matters like life support, palliative care, resuscitation, and chemotherapy. Should you become incapacitated and unable to communicate your preferences to a doctor or family member, your doctor will follow the wishes outlined in this document. Your advance healthcare directive may also authorize a family member to serve as your healthcare proxy, though this authority can be conveyed through your durable power of attorney, too.
Beneficiary Designations
With proper planning, most assets can be positioned to avoid probate and transfer to beneficiaries immediately after your death. This is accomplished through beneficiary designations on bank accounts, investment accounts, life insurance policies, annuities, and trusts.
Last Will and Testament
If you have property that’s required to transfer to beneficiaries through probate, you’ll need to address these assets in your will. In addition to naming beneficiaries for these assets, your will should nominate an executor to serve as your estate’s personal representative from the time you pass away until your estate is closed. If you have any minor children, your will should also designate a guardian in case you and your spouse pass away simultaneously.
Letter of Intent
A letter of intent doesn’t have the same legal implications as an advance healthcare directive, power of attorney, or last will and testament, but it plainly establishes your wishes in a form that attorneys and judges are inclined to follow should the issue go to court. While there are many topics your letter of intent may address and your attorney will advise you on what to include, every estate plan should include a letter of intent regarding the decedent’s funeral and burial plans. This information may also be included in your will, but it’s not uncommon for a decedent’s will to be read after the funeral — in which case the decedent’s funeral and burial plans would be too late.
Benefits of Estate Planning
It’s impossible to understate the importance of estate planning. Whether you’re a minimum wage-earning employee or a retired millionaire, the benefits of estate planning far outweigh the time and money the process requires. When you’re done, you’ll enjoy peace of mind knowing that:
- Someone is authorized to handle your affairs and care for you should you become incapacitated
- Your healthcare preferences will be respected
- Your dependents will be properly cared for and supported
- Your hard-earned assets will transfer seamlessly to your chosen beneficiaries
- Your funeral and burial plans will honor your legacy
Call Arizona Estate Attorney Dave Weed at (480)467-4325 to discuss your case today.