Members of the Centre Region Estate Planning Council want everybody to take a moment to think about their estate plans.
You may be thinking, “Why do I need an estate plan?” Well, if you have children, a spouse, own a home or have a retirement fund ,you need to think about one.
What is an estate plan? It is making decisions about things now for when you need them in the future, whether that is when you are no longer here or if you become incapacitated.
Whether you’ve had estate documents done for many years or you’re just starting out, there are three documents that everyone should consider when developing an estate plan:
■The first document is a will. The will is the document that says, “Here is what I want done with all of my items when I am no longer here.”
Within the will, there are three fiduciary roles: an executor, a guardian and a trustee.
An executor is the party that gathers all of the decedent’s asset information and debt information, uses the assets to pay the debts, and then distributes the balance according to the terms of the will. A guardian is a caretaker for minor children or, in the case of a special-needs child, for the length of time that a guardian is needed. A trustee tends to trusts that are created under wills for various reasons, the most common being for minor children or special-needs children; the trust lasts as long as indicated in the terms of the will.
When deciding on who should fill these fiduciary roles, you want to select someone who can handle the responsibilities, is a good record keeper, and, in the case of the trustee and executor, also has some financial knowledge to handle those aspects of the role.
■The second document is a power of attorney. A power of attorney is the document that allows someone to step into your shoes to manage your real property and other financial assets. This includes paying your bills if you are unable to do so.
A power of attorney also authorizes the agent to mortgage, sell, transfer and take any other actions that are necessary to assist you with your finances. An important thing to know about a power of attorney is that the agent you have named must take action that is for your benefit only. The agent’s actions can’t benefit himself/herself, nor can the agent co-mingle your funds with his/hers.
When naming an agent under a power of attorney, you want to select someone who you can trust and are comfortable with handling your finances and your real property assets. Powers of attorney often come into play when an individual is deemed incompetent, but they can also be effective and used immediately to allow spouses to transact business for each other if one spouse is unavailable.
■The third document is a health care power of attorney/living will.
The health care power of attorney is a document that states as long as you can make your health care decisions for yourself, you will make them. If there comes a point when you cannot, your agent will make those decisions based on the instructions that you have provided.
The living will portion of the document is for end-of-life decision making. That document generally states that if you are in a terminal condition with no realistic hope of recovery and it is only going to prolong the process of your dying, that you do not want heroic measures taken. If, however, you do want those heroic measures taken, that needs to be placed in the instruction of the living will as well. You want to choose individuals to act as agents who are able to make these decisions comfortably. The most important step in this process is for you to communicate your wishes to the health care agents that you have named.
In addition to the three basic legal documents noted above, it is important to think about things when developing an estate plan that really aren’t necessarily legal documents, but that your agents and family members will need at the time that you may be incompetent, incapacitated or have passed away.
In our office, we often call this list a document locator. A document locator is a written sheet of paper or a spreadsheet in the computer that provides your agents and your family with information that they may need, such as where your safe deposit box is, where the keys to that box are, where your estate planning documents are kept, where your deeds are, where you bank, what investment accounts you have and where they are located, and who the agents can contact about those assets. The same information applies to insurance policies, retirement plans, Social Security records, military records and discharge papers.
In addition to the list of documents and their whereabouts, we also recommend that you create a list of professional advisers, such as attorneys, accountants and/or investment advisers, and provide information on neighbors who might be helpful to your family when they are trying to make decisions or find information.
Further, with the technology age, if there are bills that you regularly pay online as opposed to receiving an invoice and paying it via regular mail, you will want to create a list of those bills. You’ll also want to list any passwords for online accounts that you have, including investment accounts, bank accounts and even social media accounts such as Facebook or Twitter so that those accounts can be shut down when necessary.
Finally, we recommend that clients write down their instructions for funeral services or memorial services. If that paperwork is readily available to your family it assists them at a time when they are struggling. If you are so inclined, you can prepay and make those arrangements ahead of time.
The information provided is basic information that you should discuss with your advisers to determine what may be needed in your own estate planning. Meet with your financial adviser, your accountant and your attorney, and communicate with all of them your wishes and plans for the future so that all of your professional advisers can work together to provide the best plan for you. No two plans are the same and no two situations are alike. Therefore, meeting with your advisers and planning ahead alleviates any stressful situations for your family and friends going forward.
Desiree F. Fralick is president of the Centre Region Estate Planning Council and a shareholder with The Mazza Law Group PC. Email her at fralick@mazzalaw.com.
