Estate planning is not just about your death. Estate planning involves much more than just deciding who will receive your assets at your death. Proper estate planning involves the design and implementation of a strategy to protect your family in the event of incapacity or disability as well as death.
Planning for Incapacity
If you become incapacitated, you won’t be able to manage your own financial affairs. This means that there must be someone with the legal authority to withdraw money from your accounts, pay bills, take distributions from your IRAs, sell stocks, and conduct other transactions. Many people assume that their spouse or adult children will have the ability to exercise control over their assets in the event they become incapacitated. The truth is that in order for someone to manage your financial affairs, they must petition a court to have you declared legally incompetent. This process can be lengthy, costly and difficult. Moreover, even after a guardian has been appointed to manage your affairs, he or she will remain under the supervision of the court and will be required to periodically account for how you're all of your funds have been invested and spent. If you would like a family member or trusted friend to be able to manage your assets without court proceedings, you must designate that person in the appropriate legal documents signed prior to your incapacity.
In addition to planning for the management of your financial affairs during incapacity, you should establish a plan for your medical care. The law allows you to appoint someone to make decisions about your medical treatment options if you are unable to do so. You can do this by using a durable power of attorney for health care where you designate the person to make such decisions. In addition to a power of attorney for health care, you should also have a living will which informs others of your preferred medical treatments such as the use of extraordinary measures should you become permanently unconscious or terminally ill.
Planning for Death
The process of identifying the persons to receive your assets upon your death can be accomplished by means of (i) a Will; (ii) a Trust; (iii) death beneficiary designations; or (iv) a combination of the foregoing.
When estate planning is accomplished by a Will, the administration of your estate will be subject to the supervision of the Probate Court of your county. The probate process ensures that legal title to your assets is effectively transferred to the beneficiaries named in your Will. Probate administration involves many detailed legal procedures such as the formal notification of all legal heirs, the preparation of an inventory of your assets, the appraisal of certain assets, the resolution of claims against the estate, and various accounting to be submitted to the Court. The probate process can be long, expensive and burdensome. In addition, the entire process is public and open to inspection by anyone who seeks to review the Probate Court’s file.
The complexities of the probate process can be avoided through the use of a Trust created during your lifetime. Legal title to your assets is transferred to your Trustee (usually you during your lifetime), and upon your death title remains vested in your designated Successor Trustee. Since no transfer of title is necessary at your death, there is no probate administration. Depending on the terms of your Trust Agreement, the Successor Trustee may distribute your assets to your heirs outright, or continue to hold them in trust for the benefit of those heirs. By providing for the assets to remain in trust, you can protect your beneficiaries’ inheritances from the claims of divorcing spouses or other creditors. The use of a Trust provides a great deal of flexibility in directing how your assets can benefit your family after your death.
Providing for Minor Children
It is important that your estate plan address issues regarding the care of your minor children. If your children are young, you may want to consider implementing a plan that will allow your surviving spouse to devote more attention to your children, without the burden of work obligations. You should also consider the possibility that both you and your spouse may die simultaneously, or within a short time of each other. A proper plan will provide for the appointment of a person to manage your assets as well as a guardian to raise your children. If you don’t engage in planning, the decision as to who will manage your finances and raise your children will be made by a court.
Estate Planning Guide Ohio
Click << here >> to open the Estate Planning Guide.
Included in this Estate Planning Guide is a comprehensive look into:
- Probate. In terms of estate planning, there are two forms of probate to be concerned about: – death probate and living probate. This Estate Planning Guide covers them both, explains the difference and how to avoid expenses and burdens that can be associated with the probate process.
- Drafting a Last Will and Testament. Why is relying on a Will alone is not part of a comprehensive estate plan.
- Benefits of a Living Trust. What is a revocable living trust and how can it be an efficient tool to avoiding probate at your death, as well as to avoid living probate in the event of your incapacity.