Estate planning can be a sensitive subject. No one likes to consider their own death or incapacity, or that of a loved one. When such events inevitably occur, they can lead to financial confusion and stress, unless a plan is already in place. A solid estate plan can lessen the impact on family members during a difficult time.
There are several estate planning tools available for individuals who want to prepare for handling of assets and personal care:
A will is a legal document in which a person specifies the method to be applied in the management and distribution of their estate after death. The will also appoints a legal representative to carry out the wishes of the deceased person. The person making the will is known as the “testator.”
Having a will is important for several reasons:
1. It allows the testator to direct where and to whom assets will be distributed after death. Without a will, assets will pass according to state law. The distributions provided under state law may be different than what the testator would choose.
2. A will provides for smooth administration of the testator’s estate. A will streamlines the probate process and can help avoid costly disputes over who receives specific property.
3. A will allows the testator to decide who will administer their estate. This individual, known as a “personal representative,” carries out the wishes of the testator based on the testator’s instructions.
4. With larger estates, use of a will in the estate planning process can help reduce estate tax liability.
5. A will allows the testator to appoint a guardian for the testator’s minor children in the event the testator and the other parent pass away.
Health Care Directive
A health care directive allows an individual to appoint someone to make health care decisions for them in the event they are unable to do so for themselves. The person granting the decision-making power is known as the “principal.” The person the power is granted to is the “health care agent.” The principal should keep a copy of their health care directive on file with their primary care physician.
Power of Attorney
The power of attorney is a form that allows a person to appoint another—known as the “attorney-in-fact”—to make financial decisions on behalf of the person granting the power. Having a power of attorney in place is especially important when an individual unexpectedly becomes incapacitated.
Contact Wagner, Falconer & Judd, Ltd. to discuss your estate planning needs.