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The Essentials Of Estate Planning

This article is intended to help readers understand how estate planning can benefit them by providing clear explanations in an easy to read format.

Introduction: Why Estate Planning Is So Important

Although no one likes to think about disability and death, can you afford not to? What are the costs of not engaging in estate planning? Consider the emotional and financial impact. Illness and death often is highly stressful and expensive.

If you have not done any estate planning, your spouse, child or other loved one, often after having had to cope with the stress of your illness and death, would have the additional responsibility of having to sort out your property and debts, make arrangements for the future care and support of family members, make decisions regarding the financial matters and deal with the concerns, complaints, claims and sometimes dissention among family members as to who should get what and who should control the administration and distribution process.

On the financial side, in addition to the delay and the potential substantial legal expense of resolving family disputes, the failure to have an effective estate plan can result in missed opportunities to protect assets and income from various taxes and claims against the estate, lost investment opportunities, and the misappropriation of money and property by various individuals who believe they are entitled.

1. Should You Have A Will?

A Will affords you the opportunity to choose someone you believe will take care of your affairs and distribute your property in accordance with your wishes after you die. If you die without a Will, you will die "intestate." Then, state law will determine who will receive your property, and they may not be whom you would choose. Unfortunately, the prospects of an inheritance can bring out the worst in some people. Having a Will can avoid the awful bickering and sometimes serious rifts that can result.

If you have minor children, have you considered who will care for them and manage any funds for their maintenance, support and education? Special situations often require special planning to avoid an unintended consequence. For instance, where there has been a divorce or separation, the non-custodial spouse may have rights and intentions that conflict with yours.

If you have need to provide for a dependent spouse, an elderly parent or a disabled child, a Will with testamentary trust provisions is especially important, so that you can appoint a guardian, if one is needed for the children or disabled person, and trustees you feel comfortable with to manage the trust assets after your death. If you have a larger estate or have special needs, a trust may be appropriate.

2. When Does a Trust Make Sense?

Frequently, trust provisions are built into a Will. Sometimes a separate trust will be more appropriate. For instance, a family or revocable living trust is a popular and flexible way to manage your affairs during your lifetime, preserve privacy, avoid probate and provide for the continuation of your trust after your death to educate and support your minor children. You can control the trust during your lifetime, and on your death, the trust continues as you direct and the trust assets are not part of your probate estate. If avoiding death taxes is your primary goal, there are a variety of irrevocable trusts that may work for you. Often a combination of estate planning techniques are used to gain the maximum benefit.

3. What is Probate?

Probate is formal legal process of administering your estate after your death. Everyone has an "estate" no matter how small. Everything you own is part of your estate. If you die with a Will you will have a testate estate. If you die without a Will, you will have an intestate estate.

The process begins with opening the estate by reporting the death and handling in the Will, if any, to the Register of Wills of your County. The Personal Representative is appointed and empowered to act only once the Register of Wills has issued Letters of Administration. The Personal Representative is responsible for filing all required forms accurately and in a timely manner with the Register of Wills, for collecting, and preparing an inventory of, the decedent's assets, preparing a list of and notifying and paying creditors, and various other functions. The probate process typically takes anywhere from several months to several years, depending on the issues involved. Costs include inheritance taxes, appraisal and advertising expenses, personal representative commissions, possibly attorneys' frees and court costs.

4. Avoidance of Probate; Family Trusts. The main reason to avoid probate or at least reduce the size of your probate estate is to protect assets against the claims of creditors. Another reason is reduce or eliminate probate expenses, which, in some cases, can be substantial. Probating the estate may be preferable in certain cases, and in others the costs of probate may not be of any significance.

The way to avoid probate is to remove your assets from your estate before you die or to ensure that the assets pass to your heirs automatically upon your death without becoming part of your probate estate. One may avoid probate, achieve privacy, and save considerable time and expense, by, among other things, establishing a revocable living trust or through a life estate deed in appropriate cases.

On the other hand, various types of trust, including a revocable living trust, can be very effective as a family trust to provide for the management and continuity of management of one's assets in the event of disability and death, and to provide special consideration for minors, individuals with disabilities and the care of elderly parents and other relatives.

An experienced estate planning attorney can guide you toward making a decision that addresses your needs and concerns.

5. Powers-of-Attorney.

If you should become physically or mental incapacitated, there ought to be someone you trust with clear legal authority to make decisions on your behalf. You accomplish this by signing a power-of-attorney. The person you appoint may be given broad powers to do whatever you could do, or limited powers to perform specific acts, depending on the circumstances. One has to be mentally competent in order to make a power-of-attorney. Therefore, you should not wait until illness or injury occurs. If it is too late to make a power-of-attorney, it may be necessary to apply for guardianship. Having a power-of-attorney in place will make it easier for your representative to act quickly on your behalf and avoid the stress, delay, inconvenience and expense of a guardianship proceeding.

The two types of power-of-attorney documents most people should have, are: (1) a general power-of-attorney where you appoint someone to manage your business affairs when you are no longer able to, such as paying your bills, and depositing your Social Security and other checks; and (2) the other is a medical or health care power-of-attorney to authorize someone you trust to make health care decisions for you when you are no longer able to. It is important that these documents be "durable," otherwise they will be ineffective when you are incapacitated.

Senior citizens of family members faced with a medical or other crisis may need more than powers-of-attorney. Frequently, a key concern to the family is how to pay the high cost of nursing home care yet preserve assets and income to avoid impoverishment. Consultation with an attorney experienced in elder law matters can be most helpful to enable the older person and the family to recognize and understand these important issues, engage in asset protection planning and to take advantage of the benefits available under the Medicaid regulations.

6. Living Wills/Health Care Powers-of-Attorney.

A living will, also known in some states as an Advance Medical Directive With Health Care Instructions, is one's declaration to the world not to keep one alive on life-support machines or by receiving nutrition through feeding tubes, in certain limitations circumstances. Since State law varies regarding the language that may be used, you should consult with an attorney in your area to ensure that your Living Will complies with the requirements of your State.

In short, the Living Will applies in very limited circumstances, namely when one is terminally ill and death is imminent, or one is in a vegetative or end-stage condition with no reasonable prospects of recovery and unaware of one's surroundings. One may include special individualized health care instructions.

Since the Living Will is very limited in its scope, it is important to appoint someone you trust to make health care decisions for you when you are no longer able to do so. You appoint such a person by appointing a health care agent in an Advance Medical Directive or by granting a durable medical power-of-attorney.

7. Planning For Disability

Although most of us do not know when a serious disability will occur, we know that almost everyone will experience some form of disability at some time. If the disability results in mental or physical incapacity, you will not be able to manage your own affairs. Don't you want to be the one to decide who should act on your behalf and what they may and may not do? If you do not act, the decision may have to be made by a court, and the Court may appoint someone other than whom you would have chosen.

The most simple and inexpensive approach is to appoint someone you trust as your attorney-in-fact by signing a power-of-attorney. You should have a medical power-of-attorney for healthcare decision-making, and a general power-of-attorney for your business affairs. One has to be mentally competent in order to make a power-of-attorney. Therefore, you should not wait until the illness or injury occurs. If it is too late to make a power-of-attorney, it may be necessary to apply for guardianship. Having a power-of-attorney in place will make it easier for your representative to act quickly on your behalf and avoid the stress, delay, inconvenience and expense of a guardianship proceeding.

If you want to provide for the support of a disabled child, an aging parent or other loved one, consider a trust. Trusts are a highly effective vehicle for disability planning, and there several different types, depending on what you need to accomplish. Popular trusts include revocable living trusts, family trusts, spendthrift trusts, irrevocable life insurance, supplemental needs and other irrevocable trusts.

8. What Are Life Estates? A life estate is created where an owner of a property conveys the property to another while reserving certain rights to the property, typically for the remainder of his or her life. One may reserve only the right to live in the property and have no other powers, or one may retain control and have the right to sell, lien or otherwise deal with the property, including undoing the deed that created the life estate interest. The type of life estate interest one creates depends on the planning objectives of the grantor.

Life estate deeds can be effective to avoid probate, the claims of creditors, capital gains and generally to preserve the property for one's family. Used correctly, life estate deeds without powers can provide asset protection benefits in the Medicaid context too. However, the use of life estate deeds in the Medicaid context must be carefully evaluated, since such deeds may not protect the property from a Medicaid lien and may impair eligibility for Medicaid. Life estate deeds without powers can be very limiting and cause undue burdens on one's spouse. In general, life estate deeds are an inexpensive, sensible way to protect one's most important asset. One should nevertheless consult with an attorney who can evaluate the various issues to be considered before determining whether a life estate is appropriate in your case.

9. Joint Bank Accounts. Many people add a child, relative or friend to a bank account to enable that person to take over the account and pay bills if one should become disabled. This is not a wise approach. When you add someone to an account, that person becomes a co-owner, and has the right to withdraw and use all your funds for himself or herself. Upon your death, that person owes everything in the account, regardless of any beneficiary provisions on the account or in your Will. The better approach is to appoint the person you trust as your attorney-in-fact under a power-of-attorney. That way, the person has a fiduciary legal responsibility to manager and use the funds prudently for your benefit.

Appropriate beneficiary designations on bank accounts is an effective way to keep the funds out of your probate estate. However, you need to be careful not to give up control of your funds or expose yourself to unnecessary risk. You also want to make sure the manner in which your account is titled and designated does not undermine your estate planning objective.

10. Taxes: Types, Traps & Benefits. There are several types of taxes that impact one's estate, most of which can be avoided or reduced with proper planning. You do not necessarily have to have a large estate to be affected by taxes, or to benefit from basic tax planning.

Most people have worked hard to earn what they have, and wish to ensure that as much as possible is preserved for their loved ones. Because the tax laws have many technical requirements, attempts to protect one's estate or redistribute one's wealth without professional guidance could result in a lost opportunity to avoid a substantial tax impact.

For instance, a substantial capital gains tax may be due on life-time transfers of assets that have appreciated, such a house or stock. Under certain circumstances, recognition of the capital gains tax can be deferred.

In addition to federal and state income tax issues, estate planning, or failure to plan, may be impacted by the estate tax, capital gains tax, gift tax, inheritance tax, transfer taxes and other lost opportunities to preserve one's assets and income. In the case of estates over $675,000, the failure to plan can be all the more devastating, because the effective federal estate tax rate ranges between 37% and 55%

11. How to Choose an Attorney.

Estate Planning requires an understanding of how various areas of law may impact one's estate, such as estate law, probate law, tax law, marital law, real estate law, and Medicaid law, among others. If you want to ensure that your needs and concerns are effectively considered and your rights and options clearly explained to you, it makes sense to consult with an attorney with experience in elder law matters. While most attorneys can prepare simple deeds, wills and powers-of-attorney, you need more than a product. You need a thorough professional review of your resources, needs and objectives by someone who understands, cares and will give you the peace of mind you're looking for. Experience and excellence does cost a little more, but it is well worth it. Can you afford not to do it right?


Consulting with an experienced estate planning professional is the first step to determining what really needs to be done. Then, you will be able to make an informed decision and enjoy the benefit of being guided by someone who understands your needs and concerns. Ignorance may be bliss in certain instances, but in the case of estate planning, you may never know just how much the failure to act actually costs you.

A caring estate planning professional will not rush you into making a decision or pressure you to do something you are not comfortable with. Procrastination is your greatest enemy. Act now by scheduling a comprehensive estate planning meeting. Once you understand what needs to be done, you can proceed with Peace of Mind, knowing that your concerns will be addressed.

Experience; Contact Information

Rob Goldman Legal Solutions is dedicated to helping individuals and businesses solve life's challenges by providing clear explanations and practical solutions at an affordable price. With over 15 years of experience, Rob Goldman has the knowledge and practical experience to guide you in this most important decision-making process. A member of the National Academy of Elder Law Attorneys ("NAELA"), Rob Goldman is committed to providing seniors and families with Peace of Mind.

Rob Goldman Legal Solutions invites you to visit our website at You can contact us at:

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