Estate Planning
Although there are as many variations on estate plans as there are people planning estates, there are three basic categories that they tend to fall into: Will-based plans; Trust-based plans; and no plans at all. Obviously, we rarely recommend the third option. However, we are happy to discuss whether a will-based or trust-based plan is right for you, as well as how to coordinate those plans with your assets, wishes, and family dynamics. Contact us today to get started.
Who Needs an Estate Plan?
Simple answer: Everyone. While that might sound like a very convenient answer for an estate planning lawyer, it’s true. However, the type of plan you should have will almost certainly change throughout your life. As you go through life, you’ll naturally accumulate assets (house, car, retirement accounts, etc.), maybe grow a family, likely experience loss and grief, and your values will evolve along with all of those experiences. We get that.
For that reason, we take great care to create an estate plan that’s tailored to our clients’ needs right now, as well as what their needs are likely to be in the future. The plans we recommend to young couples who are more concerned with having someone to look after their children are much different than the plans we recommend to retirees who want to make sure that their assets are distributed in a way that aligns with their values, their relationships, and the unique dynamics present in every family. Of course, things don’t always turn out the way we think they will, and we also work with our clients to update their estate plans to keep up with the natural vicissitudes of life.
Regardless of your stage of life, your assets, your family dynamics, etc., an estate plan is an essential part of ensuring that you leave the legacy you want to leave. Contact us today to get started.
What is an Estate Plan?
As an estate planning law firm, many of our clients come to us with an idea that they want an estate plan, but they’re not really sure what that term means. They know about wills, they’ve heard of trusts, but they don’t really know much beyond that. Don’t worry, part of our job is to educate. Let’s take a look at the basic components of every estate plan we prepare:
Testamentary Document
“Testamentary document” is a word only estate planning lawyers could dream up. It’s an umbrella term for two types of documents: Wills and Trusts. These documents are the backbone of any estate plan, and - in the most general sense - they contain all the instructions for how your assets are to be distributed, who will look after your dependents, who will carry out your wishes (your “personal representative”), etc. Some plans have only a will, some plans have only a trust, many plans have both. We can help you decide what’s right for you.
Healthcare Power of Attorney
This document, more technically called a “medical directive” by estate planning attorneys, allows someone to make medical decisions on your behalf if you are unable to (e.g. if you are unconscious, or your mental capacity declines).
HIPAA Release
This document simply allows your medical providers to share information with whomever you designate - typically the person designated in your medical directive to make decisions, and any close family you choose.
Financial Power of Attorney
This document allows someone, who may or may not be the same person designated by your healthcare power of attorney, to make a wide range of decisions on your behalf. Unfortunately, life doesn’t stop simply because we are incapacitated - mortgages still need to be paid, assets need to be maintained, etc., and someone has to be able to take care of these things on your behalf.
Schedule of Assets
While this is not something that all estate planning attorneys provide, we find it helpful for personal representatives to have a list of where to find assets when the time comes for them to perform their duties. By the time a person passes, these lists are often incomplete or out of date if clients aren’t diligent about updating them, but even having a few breadcrumbs to work from can save a lot of stress for a personal representative - who is often a grieving family member.
With that in mind, the next question is: Which type of plan is right for you, a will-based plan, or a trust-based plan?
Wills
Wills are probably the most familiar tool for estate planning. Though they can range from simple to complex, a will helps ensure that a person's final wishes are respected, and that loved ones are protected from unnecessary stress, confusion, or legal complications. While wills can do many things, there are three primary purposes for them.
First, wills serve as a set of instructions for how you would like your assets distributed. Although state laws typically have a “default” set of rules that work in a pinch, most people have small (sometimes large) changes they would like to make to those rules - which is where a will comes in. A will drafted by an estate planning attorney can specify that a person is to get a specific item of property, a certain amount of money, or any number of other assets. Conversely, a will can also specify that a person shouldn’t get certain property, or anything at all. The law surrounding exactly what types of property can be gifted in a will, along with how to do it, are complicated, however - and the laws around excluding people from wills are even more complicated. So, while the idea of writing down who you want to get your things sounds simple enough, doing it in a way that a Court will enforce in a probate proceeding means that even drafting a simple will is a task fraught with pitfalls for the unwary. This is maybe the number-one reason most people should hire an estate planning attorney - they simply don’t know what they don’t know.
Next, wills allow you to name a personal representative to carry out your wishes. Although most people understand that wills go through probate, even if they don’t fully understand what that entails, what surprises many people is that the Court doesn’t actually do anything to carry out your wishes. Instead, your will must appoint a personal representative (or one must be appointed by the Court) who will carry out your wishes while the Court essentially supervises the process to make sure that the will is valid, and its terms are being carried out in accordance with the law. In this framework, the personal representative can have quite a bit of influence on how an estate is settled, so picking a responsible person in your will is a critical step to take.
Finally, wills allow you to provide for the care of dependents. Most commonly, this means nominating guardians to take care of minor children or dependent adults. This, however, is another simple concept that gets complicated when the rubber meets the road. Who will pay for the added expense of caring for your child? What happens to the remaining assets? What if the guardian you nominated can’t perform, or has a major life change? Planning for the best case scenario is often pretty easy, but a resilient estate plan has contingencies in place to deal with the unforeseen, which is a much more challenging undertaking. A good estate planning attorney can help you see potential problems down the road, and come up with proactive solutions to avoid conflict later.
Of course, as with anything, there is a cost associated with having a will prepared. This cost varies based on exactly what your situation and desires are, but it’s typical to budget roughly $1,000 for a single-person will, and $1,500 for a married couple. Can you get a website or DIY will for less than that? Sure, you can. But beware that these are usually fill-in-the-blank forms, not reviewed by an estate planning attorney, and rely 100% on you to recognize and avoid the pitfalls discussed above.
Trusts
Typically, when we talk about trusts in a purely estate planning context, we’re talking about revocable living trusts. Revocable living trusts are flexible legal tools that allow you to avoid probate. At it’s core, a trust is an agreement that you (the “settlor”) will hand over certain assets to a person (a “trustee”), who will manage those assets in the way you spell out in the trust agreement for the benefit of whoever you decide (“beneficiaries”). The unique thing about revocable living trusts is that you will typically fulfill all three roles while you are alive. When you pass, a successor trustee takes over, and manages the same assets for the benefit of successor beneficiaries. Like wills, revocable living trusts let you designate beneficiaries for the assets held in the trust and appoint a successor trustee to take over after your passing. However, unlike wills, trusts provide greater flexibility in how they’re structured and how assets are distributed (including allowing distributions to be made over time), and they also keep your affairs private.
Irrevocable trusts, on the other hand, cannot be changed once established, but they can serve a variety of purposes, such as special needs planning, minimizing estate taxes, and protecting wealth. Our team can help you evaluate your goals and determine which types of trusts may be right for you.
Like a will, the cost of having a trust prepared by a real, live lawyer varies based on your specific situation and desires. That said, it is typical to budget roughly $2,500 for a single-person trust, and $3,500 for a married couple. Although there are websites out there that will prepare a trust for you for less than those amounts, one of the biggest benefits of trusts is that they are very flexible - but with added flexibility comes added complexity. Given that level of complexity, frankly, we can’t believe that any website can - in good conscience - purport to prepare these documents with a simple fill-in-the-blanks algorithm. These are documents that even attorneys hire estate planning attorneys to prepare - don’t go it alone.
How do I get Started?
We understand the estate planning process can be a bit intimidating at first - which is one of the driving factors behind our philosophy of, “Practical Approach. Pragmatic Solutions. That’s it.” Here’s how we typically approach estate planning from the start:
First, we’ll send you a short intake form to get an idea of who you are, what assets you have, how you’d like them distributed, and any other special concerns you might have.
After that, we have a meeting with you (remote or in person) where we present your options, discuss the pros and cons of each, and figure out what plan is going to work best for you.
Once we know what kind of plan you need, we’ll have you fill out a more detailed form that gives us all the information we need to create the plan you’ve decided on - and we’ll follow up if there is any additional information needed.
After all the drafting is finished, we have one more meeting with you (again, remote or in person) to go over the plan, answer any questions you may have, and make sure you understand how to store it, maintain it, etc.
The only thing you need to do to get started, is contact us today.