Is Online Estate Planning Right for Me?

Online estate planning is all the rage these days. With companies such as LegalZoom filling the airwaves with their advertisements, many are beginning to venture into this “new age” of estate planning. Online estate planning has created some uncertainty though.

Personally, I am a proponent of online estate planning. For some it offers a great alternative to the higher cost of meeting with an attorney in person while receiving comparable quality estate planning documents. However, it is not for everyone and the key is to understand when it is right for you.

That is the purpose of my new clear and concise book, “Estate Planning in the 21st Century”. In this book you will learn when you should or should not use online estate planning. After reading this book, you will feel more confident and better prepared to start your estate plan. “Estate Planning in the 21st Century” can be downloaded by clicking here.

The bottom line is that everyone needs some sort of estate plan. And now, if you don’t need a complex estate plan, there are wonderful low cost options available to everyone.

What is an Advance Health Care Directive?

Most have heard of a Living Will and some are familiar with a Health Care Power of Attorney. Now, many are becoming familiar with this new term…Advance Health Care Directive. An Advance Health Care Directive (if applicable in your state) is a hybrid of the Living Will and the Health Care Power of Attorney. It in turn has created a more efficient method of planning for your health care.

An Advance Health Care Directive informs your physician, family and friends of your health care preferences. It addresses issues such as the types of special treatment you want or don’t want at the end of life, your desire for diagnostic testing, surgical procedures, cardiopulmonary resuscitation and organ donation.

This document allows you to consider your options before they are critical issues which would require your family to guess your wishes or have to make critical medical care decisions while under the extreme stress of a medical emergency.

Here is a checklist that will guide you in creating an Advance Health Care Directive:

• Speak to your physician: This is a great place to start in order to understand your health care options.
• Speak to other key people: Family, friends and clergy representing your religious views may have important considerations that you may want to consider.
• Designate person to carry out your wishes: You could name a spouse, relative or other agent.
• Prepare an Advance Health Care Directive: An attorney is typically involved in creating an Advance Health Care Directive and this document is typically included in a complete Estate Plan.
• Inform impacted people of your decisions: Inform designated agents, your physician, health care providers, your healthcare institution, family members and anyone who is likely to be called if there is a medical emergency.

With these considerations in mind you will be well prepared to make the necessary decisions for creating an Advance Health Care Directive. However, as always, you should consult with a physician and an attorney since this will be a legally binding document that will certainly impact your life and legal options.

How Does a Power of Attorney Work?

A complete estate plan encompasses more than determining who will get your money after you pass away. Estate planning also requires you to decide who will manage your business and legal affairs in the event that you become incapacitated.

A power of Attorney is a legally binding document in which you give someone else the authority to act for you. A Power of Attorney is very versatile. It can cover simple tasks such as writing or endorsing checks as well as complex transactions like selling real estate. It can also authorize just on task, like selling an heirloom, or it can give your agent the power to perform every task that you now perform today.

You can give Power of Attorney to anyone you trust. Your agent does not have to be an attorney. You might choose your child, your sibling or spouse. Whomever you choose, don't worry about your agent "taking over" or that you won't be able to make your own decisions. In actuality, giving someone Power of Attorney is in essence like giving them a second set of keys in case of emergency. The best part is that you can take the agent’s keys back at any time by revoking the Power of Attorney.

Since there are a large number of options available to you when drafting a power of attorney, it is always best to consult with a legal professional to determine the best path for your specific set of circumstances.

How do I Pick a Guardian for my Kids?

A common element to a family’s estate plan is determining guardianship for your children if you and your spouse are no longer able to care for them. However, because most mistakenly assume that estate planning only concerns financial arrangements families often overlook this extremely important issue when deciding whether or not to create a formal estate plan.

This is an important issue for all families with minor children because, if both parents pass away, someone must care for the kids, and you don't want it to be up to the courts to decide who. The courts will take into consideration a number of factors to determine who should care for your children. However, the court will not likely have the same list of criteria that you do. Estate planning is all about maintaining control. Control over your children’s well being is lost without a proper guardianship plan.

There so many parents in America without a proper legal document to arrange for guardianship according to their wishes, and certainly some aren’t comfortable dealing with death. However, even more challenging for some parents is the uncomfortable sit-down where the two parents must decide whether it will be his favorite sibling or yours that you ask to take care of your children.

The key is to make the choice and put it in writing. You and your spouse may already agree, but a good approach is to make a list of all the people you are considering, and then run them through the following checklist:
- Are they mentally and physically healthy? (Naming someone of your own generation is preferable to naming your parents.)
- Do they have the proper financial means? (If they already have other children, caring for your children will be an additional financial burden that they will have to bear.)
- Do they have the time? (Do both spouses work and how many children to they already care for?)
- Are they geographically desirable? (After your children have been through the trauma of losing parents, uprooting them should be avoided if possible)
- Do they share your religious and social views? (Again, try to minimize the trauma associated with change that your children will experience after your passing.)

Once you have gone through this list, you will likely have at least one good option, and you are ready to put it in writing. The hard work is deciding who, the easy part, yet the one most frequently procrastinated, is actually creating the right legal document.

Do I Need a Will or a Living Trust?

Nearly everyone has some familiarity with the function of a will and most have at least heard of a living trust, however a majority of people are unclear as to why they should choose one over the other. In fact, there is a common misconception that most people only need a will and that the wealthy only need a trust. While this may be true in some circumstances, everyone should investigate both options before choosing one or the other.

Wills

A will is a document that details how you would like the probate court to distribute your property and handle your affairs upon your death. After your death, the probate court takes a properly created will and name an executor (if one is not named on your will) who will be responsible for managing the affairs of your estate as it is processed through probate. Even though a will may clearly state your desires, the probate court must oversee the entire process to assure that it is all done fairly and according to your desires. Additionally, a will becomes public record since it is submitted to the court which can be problematic for anyone with a sense of privacy over their financial affairs.

Living Trusts

A living trust, unlike a will, does not require your beneficiaries to submit to the probate process since a living trust appoints a trustee who is responsible for managing the trust property. The terms of the living trust describe how you would like your property distributed and with a trust your can maintain some level of control over your property even after you pass away. The main advantages of having a living trust are to: 1) Minimize probate; 2) Tax planning; 3) Protect your beneficiaries' inheritance from debt collections; 4) Plan for special circumstances (i.e. special needs of an heir, desire to regulate the way property is given to a beneficiary, etc). Additionally, since a living trust is not submitted to a court, the terms of the trust are not made public.

How Do I Know if I Need a Will or Living Trust?

Whether or not you need a will or trust will depend on a number of factors. In general, the primary factor to consider is the total value of your possessions and property. Depending on the state you live in, a will may suffice if your estate is minimal because the impact of probate can be relatively small. However, probate costs and complications for those who own a home or land generally require them to create a trust rather than a will.

Most understand that it is generally less expensive to prepare a will rather than a living trust; however the minor savings of a will is greatly offset by the expense and burden of probate. In the end, however, as will most things that deal with your legal rights and your money, you should discuss your particular circumstance with a legal professional in order to determine the best course of action.

Do I Need an Estate Plan?

A common misunderstanding is that estate planning is just for the wealthy. In fact, an “estate plan” comprises of much more that just the distribution of wealth using a will or trust. Most understand that an “estate plan” is used to express a person’s wishes concerning his/her property after they pass away, however, few know that an “estate plan” is also used to protect someone’s wishes concerning their property and health in case they become incapacitated and unable to express their desires.

There are many reasons why people in various circumstances implement an estate plan. Here are a few examples:

- You have children and you want to determine who should be the guardian and how they are cared for if you were unexpectedly absent.
- You have possessions which you would like to give to a specific person or persons.
- You would like to control the types of medical treatment you receive if you are incapacitated. (This may include your desire for diagnostic testing, surgical procedures, cardiopulmonary resuscitation and organ donation)
- You want to control how your friends/family receive and use the money you leave behind.
- You want a avoid probate.
- You want to avoid estate taxes.
- You have a business that you would like to continue after your death.
- You plan to give money to a family member or friend and are concerned about the tax implications.

A true “estate plan” may not only involve financial and tax planning but also medical, incapacity and business planning. A will or trust is only one part of that planning process. Other documents are needed to fully create an “estate plan.

If any of these concerns apply to you and you have not yet created an estate plan, you should consult with a legal advisor.

What is Probate?

Certainly probate is a dirty word for most, especially for those who have first hand experience. Many people have heard of probate and most have a good idea of what probate is, however, a more clear and concise understanding of what probate is will help avoid it, if necessary.

Probate is the process by which the court determines how your property is to be divided after a person passes away. The court will divide the decedent’s money and property between his/her heirs, creditors and attorneys. In fact, court and attorney’s fees will typically range between 3-7% of the total estate’s value. Further, probate is very time consuming, generally lasting from 9 months up to 2 years.

A common misconception is that a person who dies with a Will (“testate”) can avoid probate. Unfortunately, a Will must still be submitted to the scrutiny of the court to determine if it is valid, to hear any objections to the Will, to order payment to creditors and to supervise the process to assure that the remaining property is distributed according to the mandates in the Will. However, a Will is better than nothing at all, since it still gives a person some control after they pass away.

When a person dies without a Will (“intestate”) the probate court will appoint a personal representative (“administrator”) to manage the claims against the deceased person's estate. In addition, the administrator will pay creditors and attorneys, and then distribute any remaining property. When a person passes away without a Will or Trust all power of distribution is lost and their property is subject to the laws of the state.

In most instances, the best alternative to probate is the implementation a Living Trust or other estate planning instrument, which will bypass probate altogether.