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5 essential documents for your estate plan

| Nov 12, 2020 | Estate Planning |

When people hear about estate planning, many think it is only for rich people who draft a will to pass along their possessions to their loved ones. However, there is much more to it than that.

First, it is not only for the wealthy. Second, everyone can benefit from guaranteeing that their assets, finances and health care wishes are protected before and after they die.

What should an estate plan contain?

The first step for finding the plan that meets your needs is working with an experienced estate planning attorney who understands Pennsylvania’s estate and probate laws. Five key documents to consider include:

Will: For most people a Will is the basic planning document providing who will inherit property at your death and naming a Personal Representative who will handle the administrative functions and filing of the Pennsylvania inheritance tax return and other important actions in carrying out the terms of the Will. Pennsylvania’s probate system is not as cumbersome as some states, so for many people use of a Living Trust to avoid probate isn’t necessary.

Living Trust and Pour Over Will: The living trust, also known as a revocable trust, is a document that allows you to place your assets in a trust so you can continue to benefit from them while you are still alive. The pour over Will covers the assets that you don’t place in the Trust during your lifetime, and instead of the Will containing the dipositive terms, it merely transfers the assets to the Revocable Trust. When you die, after payment of the Pennsylvania Inheritance tax, your appointed representative, also known as a successor trustee, distributes the property in the Trust to beneficiaries. One common misconception is that the revocable trust reduces estate and inheritance taxes – it doesn’t. It is only a Will substitute and works best for some situations where it will be easier than administering the property under the Will.

Updated Beneficiary List: Whether you create a living trust or draft a will, having accurate and up-to-date beneficiaries is crucial. Make sure that other assets outside your Estate or trust, such as retirement accounts and insurance policies, are also updated.

Power of Attorney: While the Will deals with transferring property at your death, a General Power of Attorney authorizes someone or multiple people you trust to manage legal and financial matters. It also goes into effect if you cannot act on your own behalf.

Health Care Power of Attorney or Surrogate: Allows someone you trust to make medical decisions and oversee your care if you become incapacitated or are otherwise unable to act on your own behalf.

Medical or Advance Directive: Also called a “living will,” this document details your wishes for medical treatment and life-saving care should you be unable to make those decisions yourself.

The two documents are typically combined in a single document. It is also important that they are coordinated to clearly state the discretion that you want your agent to have in making decisions for you.

Successful estate planning is personalized

Everyone’s personal and financial situation is unique, meaning a cookie-cutter approach to estate planning is not advisable. Your lawyer will create a plan that meets your needs to distribute the estate according to your wishes and as efficiently as possible. A knowledgeable attorney works to maximize your wealth regardless of your net worth and to make sure that the plan properly addresses not only the most likely scenarios but also alternative situations which may occur.

Give your family a gift this holiday season; stop waiting and  get started on your estate planning today. We are available to meet with you in person or remotely.