Although many of us don’t like to think about planning for a future that we won’t be around to experience, a well-thought-out estate plan helps us manage and preserve assets during life and conserve and direct the distribution of assets at death.
Basic estate planning is for everyone. Through an estate plan, you have a say in the “how, when, and to whom” your assets are transferred, in addition to achieving your own specific tax and non-tax planning goals.
Core estate planning documents generally include:
Durable POA
This document allows you to authorize someone, called an agent, to handle your financial matters if you were to become incapacitated. Without a durable POA, your family members would have to institute legal proceedings and request a probate court to appoint a guardian to carry out these responsibilities. By addressing the possibility of incapacity in advance through a durable POA, you and your family can avoid the expense and potential hassle of the probate process.
Health Care Documents
With a health care POA, you authorize an agent to handle your health care needs in a manner consistent with your intentions in the event of your incapacity. This includes permission for the agent to authorize actions regarding the continuation of life support, nutrition, and hydration, as well as to deal with general health care decisions that may arise.
Some states authorize a secondary health care document, typically called a living will. It works in conjunction with a health care POA, authorizing your health care providers to take specific action in the event that there is no reasonable hope of your recovery. It also serves an important function if the agent or other individuals you named in your health care POA are unable to decide on whether to continue life-sustaining treatment for you.
Will
A will allows you to direct who will receive your property upon your death and under what circumstances. It also enables you to direct the payment of estate administration expenses and taxes and nominate an executor to handle these matters. Even more important, it allows you to designate a guardian for your minor children.
Trust
With a trust, you can plan for the management of assets during your life, if you become incapacitated, and upon your death. A trust can also help minimize potential federal or state estate taxes. Trusts come in two general forms: testamentary trusts, which are created under a will and are funded at death, and living trusts, which can be funded during your lifetime. Generally revocable, a living trust is the centerpiece of a well-rounded estate plan. When a living trust is established, the process of distributing assets at the time of death will not be subject to the jurisdiction and oversight of the probate court.
Your well-thought-out estate plan can help:
A will governs only probate property; a trust governs only assets owned by the trust. In addition, some assets pass outside of probate by virtue of a beneficiary designation or the manner in which title is held. Therefore, it is important for you and your financial advisor to review the ownership and/or beneficiary designation of these assets to be sure that they will be distributed according to your wishes upon death.
These assets include:
Estate planning is one of our specialties. We can coordinate efforts with your attorney and tax preparer in creating an estate plan that suits your needs and purposes and helps achieve your financial and personal goals.
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Johnathon Opet, CFP®, is a financial advisor located at EmVision Capital Advisors, 251 W. Garfield Rd. Suite 155 Aurora, OH 44202. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at (330) 954-3770 or at info@emvisioncapital.com.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.