Natalia Vander Laan
The last few articles discussed the complicated, lengthy, and often expensive nature of probate. But probate is not necessary if proper estate planning is implemented. Proactively engaging in estate planning prior to one’s passing can alleviate the burdens imposed by probate proceedings.
The meaning of the word “estate” is not limited to a mansion and luxury vehicles. Legally speaking, “estate” is all the property owned by an individual at the time of their death. So, a person’s estate typically includes a house, bank accounts, investment accounts, retirement accounts, vehicles, and personal property such as furniture, jewelry and family heirlooms. As the term “estate” does not mean only expensive assets, similarly, estate planning is not only for the wealthy. In fact, even when the estate is modest, having an estate plan that allows beneficiaries to avoid the expensive costs of a lengthy probate proceeding is a financially sound option.
Estate planning involves planning for one’s incapacity and death as well as leaving instructions on how one’s property should be distributed after death. Good estate planning incorporates instructions for the health-care agent in the event of physical or mental incapacity; authorization for the financial agent to manage one’s assets during incapacity; funeral arrangements; provisions for the payments of debts and liabilities; naming a guardian for minor children or disabled persons; and arrangements to minimize estate taxes, attorney’s fees, and court costs.
Estate plans differ. However, the essential components of estate planning are similar. A comprehensive estate plan includes either a will stating who will inherit the decedent’s property and identifying the executor of the estate during the probate process, or, if one wishes to avoid probate, owns real estate, has multiple beneficiaries, wishes to include special restrictions on the distributions of the assets, or wishes to address the needs of minors or persons with special needs, a living trust.
A crucial part of the estate plan that includes a trust is transferring assets into trust in order to ensure that the wishes expressed in the trust control the distributions of one’s assets properly titled in the name of the trust.
Finally, a good estate plan includes both a health power of attorney authorizing a designated person to make healthcare decisions and end-of-life treatment decisions on behalf of an incapacitated person and a financial power of attorney authorizing a trusted person to manage the financial affairs of an incapacitated person. This minimizes the need for a court-appointed guardian.
In addition to those essential components of an estate plan, there are optional items such as funeral arrangements, separate dispositions of personal property, or property agreements between spouses.
Most people understand the need for an estate plan but oftentimes wait until it is too late. The most common reason for delay is the concern that the process will be too expensive. However, sometimes the essential documents can be completed at a reasonable cost. If needed, the optional documents can be completed in the future.
Regrettably, the need for an estate plan is often ignored or the documents remain incomplete, causing additional distress to the deceased’s loved ones.
Natalia Vander Laan is a Minden attorney
