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Estate Planning

Estate planning is the process of reviewing your family dynamics, family assets, and family goals during and after life. Common documents used in the process are Wills, Trusts, Financial Power of Attorney, Health Care Power of Attorney, HIPAA Authorization, Living Will, Transfer on Death Affidavits, and many more.

Signing a Contract

Estate planning is simply figuring out what is your "estate" and then coming up with a customized "plan" that can be accomplished through various legal documents. This page is intended to provide some general information and is not intended to be legal advice.

What is an Estate?

It is any interest you own in real property (physical land and its structures) and stuff (cars, bank accounts, jewelry, etc.). 

How do I plan my estate?

First, we must identify what your goals are during life and after life. Typically plans prioritize the goal of protecting and providing for your spouse and children.

 

Second, we must identify any potential family conflicts, special needs individuals, and any potential long-lasting legacy giving. This gives the estate planner and family a guided focus on what estate planning documents should be drafted. 

What planning documents should I have at minimum? 

1. Last will and testament

A will is a written document with instructions for the Court to distribute your estate. This must be signed by the maker of the will, or by some other person in the maker's conscious presence and at the maker's express direction. It must also be signed by two witnesses in the conscience presence of the maker signing the will, or heard the maker acknowledge the maker's signature. 

All of the above is some of the technical requirements to make a valid will. A will being deficient in any of the above may invalidate the will. Also, a will is not valid if there is undue influence or undue restraint (being bullied/tricked into signing) or not being having the necessary sound mind and memory (testamentary capacity) to make a will.

There is a special rule for "oral" wills. This will must be made in the last sickness of the maker and put in writing within 10 days after two disinterested witnesses heard the words spoken, then signed by those two witnesses. If you have one of these, you must probate that will within 3 months of the maker's death.

A quick digression on why it is called "last will and testament"- you may have noticed lawyers like saying things in pairs (Legal Doublets), such as last will and testament. This is because once upon a time we were a colony of England under English law. In fact, American common law is based on English common law. Prior to the Norman Conquest in the eleventh century, in English law you would "will" your holdings to a person if you had no bloodline relatives to take your property. After the Normans won the Battle of Hastings, they brought French common law and the term "testament" along. So very much like lawyers today, they started to call it a last will and testament to make sure they covered all their bases, just in case. Eventually it morphed into the will part dealing with land and the testament part dealing with personal property. Today there is a push to get away from the hang up of how things are titled and read the actual context and intent of the writing to see what the maker intended. 

2. Financial Durable Power of Attorney

The financial durable power of attorney (FPOA) is perhaps the most important document a person can have in their estate plan. This document allows a trusted individual to essentially step into your shoes and do everything financially on your behalf. Without this document, the only way the family can plan, if you become incapacitated, is seeking a costly and lengthy Guardianship from the Courts. 

This document allows that trusted individual, and back up individuals, to create trusts, fund trusts, deal with the IRS, apply for government benefits, and many more powers. The worst feeling as an attorney is when a family doesn't have a strong FPOA and I have to break the news to them that instead of saving the family's nest egg and house, we may very well lose their savings. 

3. Health Care Power of Attorney

This document is fairly straightforward but nonetheless extremely important. In your Health Care Power (HCPOA) you appoint an individual, and back up individuals, to make health care decisions on your behalf. This means the person you appoint signs off on treatment plans and even can admit you into long term care facilities. 

4. Living Will

This document specifically allows you to decide if you want to be disconnected of artificial life support in two specific circumstances; deemed in a terminal condition or permanently unconscious by two doctors to a reasonable degree of medical certainty. Also, it allows you to sign a do not resuscitate (DNR) if they do disconnect you and decide if you want to donate your organs upon your death. 

5. HIPAA Authorization

Health information is private unless you designate individuals access to your health information. This document ensures that the flow of health information is not disrupted.

Why didn't you mention a Trust in the list of documents everyone needs?

Simply put, not everyone needs a trust. But there are specific circumstances where a trust is the best plan for your family.

Under what circumstances do I need a trust?

In general, there are 3 main reasons a family may need a trust.

1. Probate Avoidance and Privacy

Probate is the Court process of transferring assets from the deceased to the living. Because it is a Court process it can take a long time to actually transfer the assets. In Ohio, creditors have 6 months to make a valid claim against a probate estate. Because of this, probate attorneys advise clients to wait at least 6 months before transferring assets. In addition to the delay of getting estate assets to your beneficiaries, it can be a costly process. You will pay hundreds in court costs, potentially 4.5% to an attorney and 4% to the executor/administrator. 

A Trust avoids probate, because a trust lives on after the maker's death. The trustee is given instructions on how you want to divide up the property and follows those instructions without needed Court authority. Assets can given to beneficiaries immediately or under any other way the maker decides. 

So, you avoid the delay of distributing assets and avoid the costs of probate with a trust. The other added benefit is the process is done outside a public court docket. This means your family receives their portion of the trust privately. This is in contrast to probate where you must list what beneficiaries receive down to the penny and this accounting is a public document anyone can acquire. 

2. Asset management during life and after

Stuff held in trust is administered by the trustee that has the same legal authority to manage those assets as if it were in their individual name.  In a circumstance where you are the trustee but become incapacitated, then the back-up trustee can come in and keep up the management without needing guardianship or even using the FPOA. 

The same holds true when you pass away; another trustee steps in and administers the trust to your written instructions. In contrast to a will that distributes assets in one lump sum, a trust can contain instructions that set up distributions over time, make sure certain conditions are met to receive assets, or an education trust for children/grandchildren.

 

3. Asset Protection

Here we must break down the two major classes of trusts. 

 

A. Revocable Trust- this trust is revocable by the maker (grantor). Meaning that at any time you can terminate the trust and return the assets back into your name while you are living. Also, you can alter the trust at any time up until your death.  You are the beneficiary of the trust during your lifetime. This type of trust does not provide asset protection during your life. However, it does provide asset protection to your beneficiaries after you die. That means the money can be safe from a beneficiary going through divorce, bankruptcy, lawsuits, etc. 

B. Irrevocable Trust/Medicaid Asset Protection Trust- this trust is irrevocable by the grantor. Meaning that once created you cannot terminate the trust or make major changes to the language of the trust.  You are not the beneficiary of this trust during your lifetime. This type of trust does provide asset protection when applying for Government needs-based programs like long-term Medicaid. After your death, it provides the same asset protection as the revocable trust provides to beneficiaries. (See more information under the Medicaid tab of this website)

What is a Transfer on Death Affidavit (TOD)?

This is a way to avoid probate when you want to transfer your home or any real estate to a named individual(s), company, or trust. It is a document filed at the local County Recorder Office that tells the world you want your real estate to transfer to your named beneficiary. After you die, the named beneficiary files a affidavit of confirmation with an attached death certificate and the property becomes theirs without going through probate.

What are Beneficiary Designations?

On most retirement accounts, life insurance, and financial instruments you can designate who gets those assets after you die. This is done through the individual company's contract and is another way to avoid probate.

What is Payable on Death (POD)?

Many bank accounts allow you to set up a beneficiary to withdrawal your funds after your death. This is another probate avoidance technique used by estate planning attorneys.

What else do I need to know?

It's impossible for me write everything you need to know, that's why I provide a free initial consultation where I can address all your questions and concerns before any document is drafted. You can call, email or fill out the contact us form below to get the ball rolling. 

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