Estate planning is not just about
avoiding probate, although that is often important. It is about protecting you, your family’s
future and your legacy. What would
happen to you and your family if you were incapacitated? How will your family prosper without
you? How will your family remember you? With the big picture in mind, let us consider
the issues that may be important to you, your surviving spouse, your
descendants, and your charitable interests.
First, are you and your family
protected if you become physically or mentally disabled? Appoint someone you trust to manage your
finances and property, to arrange for your personal care, and to provide for
your spouse and dependents. A
comprehensive durable power of attorney for finances and property management,
or a living trust, allows your agent, or trustee, to step-in to pay your bills,
taxes, and control your assets. You can
also authorize gifting to your family members should you need to receive needs
based government benefits and wish to preserve more assets for estate planning
Second, a durable power of attorney for personal care allows
your agent to hire care givers to provide in-home care, get your mail, and, if
necessary, to place you in a hospital or nursing facility. And, an advance health care directive allows
your health care agent to implement your health care instructions when you lack
Next, is your spouse protected if
you become disabled, and later when you die?
If your spouse is dependent on your resources ensure that your agent and
trustee, as relevant, have authority to use your assets (inside and outside
your living trust) to provide for your spouse. Determine whether your retirement plans
adequately protect your spouse. If not,
consider life insurance. Your trust can keep assets for your spouse’s use after
you die and then transfer them to your children. If your spouse is unable to manage assets, have
someone else manage your estate as successor trustee for your spouse’s benefit.
In regards to your children and
grandchildren, the approach you take should suit each person’s own individual
circumstances. Consider whether any of
them have special needs, creditor issues, spendthrift issues, or might still be
minors when you die. If so, then some
shares of your estate may pass to special needs trust, asset protection trusts,
or to minor’s trusts for their benefit.
Also, consider your aspirations for what you wish to enable them to
achieve. Do you wish them to have money
for college, to start a business, buy a first home; if so, your estate plan
could be drafted to provide for such goals.
Your charitable and philanthropic
interests may coincide with your own financial and asset protection needs. You may wish to turn an asset, like a home, into
a current stream of income by gifting it during your lifetime to a charity in exchange
for charitable gift annuity during your lifetime. You may want a tax deduction for gifting
assets while living to see the fulfillment of a goal. Consult with a qualified financial planner
about these potential win-win opportunities.
The foregoing ideas are just some of
the important topics that may, to some extent, be relevant in your own personal
situation. The point is to think broadly
about what is, or may, become important to you.
Planning now will give you peace of mind and protect you and your family
in the future.