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Estate Planning for Everyone

By Peter A. Rivellini | Categories: Trusts & EstatesPrint PDF January 2012

Most people think about estate planning the same way they think about cleaning out the garage or scheduling a root canal. Let’s face it, if given a choice, who would want to plan for their demise instead of watching football or Dancing with the Stars? Understandably, people tend to put this off. However, with a little understanding of what is involved, the estate planning process can be less daunting.

While a comprehensive estate plan is crucial for the wealthy, a basic estate plan can be equally as important for those of modest means. Many believe that a person’s last will and testament is only used to name the lucky individuals who will inherit money upon a person’s death. Yet, this is only one detail of a much larger picture. There are other aspects that are very important to lessening the burden on the family left behind.

An estate plan will incorporate several different documents with each serving a specific purpose. The typical documents include a will, a durable power of attorney, a living will, a pre-need guardian designation and a memorandum of separate writing. Many plans also incorporate revocable trusts. A detailed analysis of each document would require more space than I am permitted, so I will highlight some of the major considerations of each of these documents.

The last will and testament serves many functions. Generally, the first function of a will is to name a Personal Representative. The Personal Representative (“PR” or “Executor” as it is called in many other states) is the person you designate to legally act on your estate’s behalf after your death to oversee the probate administration. Another function of the will is the designation of guardians for any minor children that may be left behind. For anyone with minor children, this is often the most important reason to have a will. The birth of a child is commonly the impetus for clients to call me.

Of course, a will also specifies who gets what assets. This may seem fairly straightforward. However, how someone gets an asset may be just as important as who gets what. For example, would you leave your $1,000,000 net worth outright to your 17-year-old son? That may cause him to forgo medical school and head to the Bahamas with his friends in his brand new speed boat . If you decide instead to leave the money in trust for your 17-year-old son, you must also consider who will be responsible for the child’s money, for how long, and under what terms the money will be distributed. The same considerations should be made for older children as well. How many 40-year-olds do you know who would burn through a $1,000,000 inheritance faster than David Hasselhoff getting kicked off “Dancing with th(I would choose a new analogy – you used DWTS once already)?” These issues can be addressed and thought through with the help of a qualified estate planning attorney, usually without too much heartburn.

The Revocable Trust is also often a part of the estate plan. The main reason for using a Revocable Trust is to avoid probate. There are many reasons to avoid probate, which would make a good topic for a future article.

The Durable Power of Attorney (“DPOA”) allows you to designate someone or several people to make decisions and act on your behalf during your life. The authority is generally very broad. This can be very useful for people as they age and become stricken with injuries or sickness that make them either physically or mentally able to sign documents. Without a DPOA, the process to obtain legal authority on behalf of another is the judicially supervised process known as “Guardianship,” which is rarely a better alternative. Be careful who you name as your authorized agent – most DPOAs are effective immediately upon signing, although a DPOA can be made effective upon the determination of your incapacity. A DPOA is a very powerful document that should not be taken lightly.

Another common estate planning document is The Health Care Surrogate Designation, which is similar to a DPOA, but it is limited in scope to medically related decisions. It has become increasingly difficult for family members and (especially) non-family members to communicate with doctors and health care professionals due to HIPAA regulations.
The Living Will has only a single purpose. It is your declaration that you do not wish to be maintained on life support when it is evident you have a terminal condition, an end-stage condition, or you are in a persistent vegetative state and that there is no reasonable medical probability of recovery from such condition. This decision is made by the attending doctor and a second doctor. A Living Will can designate an individual with whom the health care professionals must consult prior to removing life support. You must carefully consider who you name as your agent. Does this person have the fortitude to make a difficult decision at an emotional time? Many people who had never considered the importance of Living Wills requested them after the heavy media coverage of the Terry Schaivo case.

The last common estate planning document I will address is a Memorandum of Separate Writing, which is a simple document that allows you to distribute items of tangible personal property in connection with your Last Will and Testament. If properly referenced in the Will, this Memorandum, can be as simple as a handwritten list made by you any time after you have executed your Will. Because it does not need to be witnessed or notarized, you can change your mind and revise the list at any time. This is commonly used to designate who gets grandma’s china or the antique clock.

One reason why many people avoid preparing an estate plan is because they are not aware of what is involved. As you can see, however, the process isn’t as daunting as many may believe. Hopefully, more people will tackle this task before the garage gets too cluttered and with less pain than a root canal.

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