Legal Corner: 6 Simple Steps to an Estate Plan

We know it’s not fun to think about, but the reality of life is that it isn’t going to last forever. We’re talking about estate planning — something that’s important for everyone. The following six steps will help ensure that you have your legal ducks in a row, making it easy for your loved ones to carry out your wishes.

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1. Create (or update) your will

Virtually everyone postpones writing a will — maybe we don’t want such a tangible reminder of mortality, perhaps we view the process as relinquishing the ownership of our property, or maybe we think we have nothing of value. Whatever the excuse, we need to realize that having a will actually prevents what is feared most; that you will have no control over what happens to your hard-earned assets.

Asset disposition through a will:
You decide who gets your house, your car, your pets and your other assets, not the state. If you pass away without a will (“intestate”), by operation of law, the state where you live will make these decisions.

Naming a guardian for your minor children:
Ensuring that your children are well cared for in the event of your death can be accomplished through a legal guardianship provision, which will allow you to:

Name who you want raising your children
Name all of the members of your immediate family so it’s easy to locate them
Designate an individual as trustee over any financial assets you might leave minor children

Naming an executor or executors of your will:
The executor of your estate is commissioned with tasks such as determining debts and other claims against the estate, managing the estate assets, determining and paying all taxes, distributing the estate to beneficiaries, and complying with the state reporting requirements in a timely manner. If you know someone with a law degree or an accounting background, they may be a good choice to serve in the role; however, many people choose their closest relatives. Just be sure to check your state laws to determine any residency requirements for persons serving as executors as many states require this person to be a resident of the will probating state.

Update your will every three years, especially if you:

Experience a significant life event (ex: marriage, divorce, sell a business)
Move to a different state since each state may have different validity requirements (ex: the number of witnesses required and whether it must be typed or can be handwritten)
Change your mind about how your assets should be distributed
Change the beneficiaries under the will

Still worried about deciding how your assets will be distributed? It’s important to note that your will has no effect during your lifetime, and that you can change it (or revoke it) whenever you want.

2. Create an advance healthcare directive (or living will)

A living will addresses your medical affairs, giving you an opportunity to expressly state the kind of medical care you wish to receive, and at what point you no longer wish to receive any care. This document is important to have in place in the event that you become incapacitated or are not able to speak for yourself. Issues that should be covered include: resuscitation, mechanical ventilation, tube feeding, dialysis, antibiotics or antiviral medications, comfort care (palliative care), and organ and tissue donations. Activation of a living will usually requires a certification by your doctor and another doctor that you are either suffering from a terminal illness or permanently unconscious before it becomes effective.

3. Power of attorney (POA)

There are several different types of power of attorney documents, in which you give an “attorney-in-fact” or “agent” the legal authority to make decisions.

General power of attorney typically permits your agent to handle your affairs. The agent usually has the power to: buy and sell property, handle banking transactions, enter safety deposit boxes, file tax returns, settle claims, and purchase life insurance.
Limited or “special” power of attorney authorizes your agent to act on your behalf only in certain, specified situations.
Health care power of attorney allows your agent to make health care decisions on your behalf if you are unconscious, mentally incompetent, or unable to make independent decisions.
Durable power of attorney, whether general, limited, or health care, may allow your agent to carry out the powers you granted, whether you have the inability to do so or not. Unless a power of attorney is made “durable” by specific language, your agent can only exercise a power that you are able to do. For example, if you’re in a coma and can’t sign a contract, your agent can’t sign either.
Springing power of attorney is an alternative to creating a durable power of attorney, meaning the power granted in the document only takes effect upon a specified event, condition, or date.

All power of attorneys can be revoked at any time and become void at the time of death at which time your will becomes the controlling document. Lastly, the laws for creating a power of attorney vary from state to state and may or may not require a notary public.

4. Review and update beneficiary designations

Naming a beneficiary for bank accounts and retirement plans makes the account automatically “payable on death” or “transferred on death” to your beneficiary and allows the funds to skip the probate process (that long, arduous process your will must go through).

Beneficiary designations on life insurance policies, annuities, retirement plans, payable-on-death accounts, and other assets will generally override any conflicting provisions in a will or trust. Thus, it’s essential to make sure all forms are checked and updated regularly – ideally annually.

5. Put all of your important documents in one place

Do you have a special pile of unorganized papers that you consider important but, like me, store carelessly under your bed or in your closet? If so, you know how challenging it can be to find important legal documents during a time of peace, let alone moments of dire need. I strongly suggest compiling all important paperwork (wills, trusts, POAs, etc.) and passwords in one location. This could be as simple as setting up an expandable file, or storing everything in one desk drawer, or it can be as secure as putting them in a bank safe deposit box. If you choose to put your papers in a bank safe deposit box, you should also keep copies in a file at home to ensure more accessibility. Either way, be sure to review your file each year to see if there is anything new that needs to be added.

6. Share your plans

Do you wish for your daughter to have the wooden rocking chair in your bedroom? Want your son to make medical decisions when you are unable to do so? If you have gotten this far in our tips, you most likely know what you want, but have you communicated your desires, or jotted them down? Our final suggestion is to explain your wishes to important friends and family, especially if they might have a role to play, and let them know where you keep your important documents.

We understand this type of planning involves difficult decisions. While we hope you find these tips useful, they’re not legal advice, so if you need further guidance we encourage you to consult an attorney in your state or utilize LegalShield Services.

All CVC-assisted patients are eligible for a discount when enrolling in this dedicated on-call law firm.

Please visit http://bit.ly/LegalShieldCVC or call 585-314-3111 for additional information.

by Lauren Patrizio, Esq.
CVC Senior Patient Advocate

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