What is a Living Will and how is it different from a Will?
A Living Will, also known as a Physician's Directive, is a separate document from a Will. A Living Will designates how you wish to be cared for regarding your medical care and treatment while you are still alive if you are unable to specify those wishes yourself. For example, you can designate whether you wish to be kept on life prolonging machines if there is no longer any hope that you will recover from an accident or long-term terminal medical condition.
The difference between a Will and a Living Will is that the Living Will dictates how you will be cared for while you are still alive and a Will dictates funeral arrangements and how your assets will be divided after you pass away.
- What is estate planning?
Estate planning is a process to consider alternatives for, to think through, and to set up legally effective arrangements that would meet your specific wishes if something happens to you or those you care about. Good estate planning is more than just a simple Will. Estate planning also typically minimizes potential taxes and fees, and sets up contingency planning to make sure your wishes regarding health care treatment are followed.
On the financial side, a good estate plan coordinates what would happen with your home, your investments, your business, your life insurance, your employee benefits (such as a 401K plan), and other property in the event you became disabled or if you die.
On the personal side, a good estate plan includes directions to carry out your wishes regarding health care matters, so that if you ever are unable to give the directions yourself, someone you select would do that for you, and know when you would want them to authorize heroic measures and when you would prefer they pull the plug
- Does it make sense to use an attorney? Is it expensive?
Only an attorney who regularly practices in the fields of wills, trusts, probate and estate planning is able to provide you with really sound legal advice as you put your estate plan into place. Attorneys are subject to regulation by state bar organizations, many of which have continuing education requirements and mandatory liability insurance in case the lawyer makes a mistake.
When you speak with an attorney, you can get answers to your questions --including how much it would cost.
Often the expense incurred in retaining an attorney to prepare and help you put an estate plan into place is worth hundreds of times what you and your family would pay with no planning or poor planning. It would also avoid the financial and emotional nightmares that can occur with a poorly drafted (or improper) plan.
- What is an estate?
The term estate consists of all the property a person owns or controls, whether in his or her sole name, held in a partnership, in a joint ownership arrangement, or through a trust, and all other monies that would be generated on the person`s death, such as through life insurance. It includes:
• real property and things attached to it (houses, buildings, barns, etc.)
• all personal property (including automobiles, bank accounts, stocks and bonds, mutual funds, stock options, cash, furniture, jewelry, art, collectibles, etc.)
• all businesses and business interests (sole proprietorships, partnerships, corporations, joint ventures, and the goodwill, inventory, tools and equipment, accounts receivable, and other business property, etc.)
• powers of appointment (the right to direct who gets someone else`s property)
life insurance and annuity contracts, pension benefits, IRAs, 403(b)s, etc.
• all debts and obligations owed to others
• all claims you have against others, such as for the pain and suffering from an auto accident.
- When should I start my estate plan?
The only time that you can prepare and implement an estate plan is while you are alive and have legal capacity to enter into a contract. If you are unable to manage your own affairs or suffer from some other disability which affects your legal capacity, your estate plan may be effectively challenged by those who assert that you lacked capacity at the time the documents were created, that you were subjected to fraud, coercion or undue influence during the creation and implementation of your plan.
The best time to start an estate plan is now, while you have the capacity to do so.
- Should I have an estate plan?
You should have an estate plan if:
• you are the parent of minor children
• you have property that you care about
• you care about your health care treatment.
If you do not have minor children, do not care about your property, and have no concerns about your health care treatment, then you do not need an estate plan. But if you meet any of these categories above, you should have an estate plan.
- What sort of instructions are made as part of an estate plan?
An estate plan consists of one or more documents that set forth instructions. Some documents are used to control health care decisions, others control your property in the event of your incapacity, and still other documents will control the distribution of your property in the event of your death.
- How can an estate plan prevent a conservatorship preceding?
An estate plan uses several tools which can prevent the court from gaining jurisdiction over your affairs.
• Living Will or Directive to Physicians is used to determine if artificial life support systems are to be used or withheld.
• Durable Power of Attorney for Health Care is used to provide authority to a person, in whom you have the utmost trust and confidence, to make decisions regarding health care treatment when you are unable to provide informed consent.
• Durable Power of Attorney for Property enables you to authorize a person to act in your place and stead in the event of your incapacity; this attorney-in-fact can manage your financial affairs without the need to have intervention by the courts.
• Trust or Family Limited Partnership is used to hold property; the Trustees or Partners manage the property held by either of these entities.
• Both the Trust and the Family Limited Partnership continue to manage the property even if you are incapacitated.
Thus, a properly prepared estate plan can enable you to avoid a Conservatorship proceeding over your estate. Compared to the cost of a Conservatorship proceeding, an estate plan can be very attractive.
- What about books on estate planning?
As you begin the process caveat emptor (let the buyer beware). There is a lot of information out there; while some of it is very good, some is misleading at best.
There are many over-the counter guides to estate planning available at bookstores. Some are pretty decent, most are awful. If you are planning to do it yourself, be prepared to spend a fair amount of time on this project.
- What are some typical estate planning documents?
Several of the following documents are typically used as part of the estate planning process:
• A Will, sometimes called a Last Will and Testament, to transfer property you hold in your name to the person(s) and/or organization(s) you want to have it. A Will also typically names someone you select to be your Personal Representative (or Executor) to carry out your instructions and names a Guardian if you have minor children. A Will only becomes effective upon your death, and after it is admitted to probate.
• A Durable Power of Attorney for Health Care or Health Care Proxy appoints a person you designate to make decisions regarding your health care treatment in the event that you are unable to provide informed consent.
• A Living Will or Directive to Physicians is an advance directive which gives doctors and hospitals your instructions regarding the nature and extent of the care you want should you suffer permanent incapacity, such as an irreversible coma.
• A Durable Power of Attorney for Property appoints a person you designate to act for you and handle financial matters should you be unable or perhaps unavailable to do so.
• A Living Trust can be used to hold legal title to and provide a mechanism to manage your property. You can select the person or persons you want -- often even yourself -- as the Trustee(s) to carry out the instructions you want in the Trust and name one or more Successor Trustees to take over if you cannot. Unlike a Will, a Trust usually becomes effective immediately, continues in force during your lifetime even in the event of your incapacity, and continues after your death. Most Trusts are revocable which allows the person who creates the Trust to make future changes, modifications and even to terminate it. (If the Trust is irrevocable, changes, modifications and termination are very difficult (and sometime impossible), although such Trusts often carry some tax benefits.) Trusts also help you avoid or minimize the expenses, delays and publicity of probate.
• A Family Limited Partnership can be used to own and manage your property, in a similar manner to a Trust, but allowing additional tax planning techniques to be employed. Family Limited Partnerships are typically used for those who have large estates and thus have a need for specialized estate planning in order to minimize federal and state estate/death/inheritance taxes as well as provide elements of asset protection.