A Simple Plan.
Estate planning is a wonderful, flexible tool for providing for death and disability. At its best, an estate plan can provide for your family, control the timing of estate distributions, avoid unnecessary estate and income tax, maximize your estate, and provide protection from creditors.
However, not everyone wants a complex plan. Many of my clients want a simple plan; one that provides for the basic needs of their family. These clients ask me what they need in order complete their plan.
What is an Estate Plan?
A commonly used definition of estate planning is:
I want to control my property. I want to take care of myself and my loved ones. At my death, I want to give my property to whom I want, when I want, and the way I want. And in the process, I want to save as much in taxes, costs, and attorney fees as I can.
This definition blends both simple and advanced planning objectives.
For example, giving property to the person you want may seem simple. The complexity comes from doing it at the time and in the way that you want.
Take the case of a parent with minor children. If that parent passes away while the child is still a minor, property transfers to the child under the Minnesota Uniform Transfer to Minors Act. That act requires the property to be held by a trustee until the child attains the age of 21. That age is perfectly acceptable to some parents, and unacceptable to others. The parent’s willingness to accept the transfer at the age of 21 would be a factor that determines whether a “simple plan” is appropriate.
The definition suggests any number of ways that a client can choose to control their estate: by controlling the ages that beneficiaries receive property, modifying the amount of control a beneficiary receives over the property, protecting a child’s inheritance in the case of blended families and remarriage, minimizing estate taxes, etc. A client who is willing to relinquish these and other controls may request a basic or simple estate plan.
The Essential Documents.
There is a difference between a simple estate plan, and one that is simply incomplete. Too many times I have seen clients come into my office to review an estate plan that consists of only a will. Sometimes those wills are well drafted, and sometimes they are not. However, whether or not the will is well drafted, their estate plan is incomplete.
A good estate plan, even a simple one, deals with both death and disability. A will alone deals only with death.
Every client who hires my firm for estate planning receives documents that plan for death and disability. This includes, at a minimum, a will, power of attorney, and a health care directive, but will usually also include HIPPA releases, a living will, property lists, memorial instructions, and other documents meant to help in the handling of the client’s estate.
While a will provides for the client’s death, the power of attorney designates a spouse, family member or friend to make your financial decisions for you. If you are disabled, who will pay your utilities, manage your checking account, or pay for your health care? Picking a power of attorney to help with these functions is disability planning, and part of every good estate plan.
Another piece of disability planning is picking someone, your health care agent, to make your health care decisions for you. This is done in a health care directive. In that document, you provide instructions, and give that person the power to direct your care. The power only exists in situations where you can not make your own decisions, and that person is required to make decisions consistent with your wishes.
Having a power of attorney and a health care agent are just as important to your estate plan as drafting a will. Even if you are opting for a basic estate plan, you should do your due diligence, and make sure it is complete
A basic estate plan is not for everyone. For most of my clients, there is a benefit to more advanced planning. However, if you do decide to purchase a basic plan, make sure that planning is complete.
If you have questions about estate planning, you can contact me by email at email@example.com, or by phone at 651-705-6277