What’s the Importance of Having an Estate Plan?
An estate plan outlines your preferences for things like major medical decisions, finances, legal affairs, and family matters. It can relieve your loved ones of the burden of making difficult decisions if you die or become incapacitated before you can make those decisions yourself.
A solid estate plan can prevent familial disputes over money, assets, custody, or healthcare. With proper planning, you can simplify matters for your loved ones by ensuring they receive what’s rightfully theirs and eliminating the stress of figuring out your final wishes.
Types of Estate Planning Services
At Pennington Law, PLLC, we help our clients with every aspect of estate planning, from valuing assets to making necessary updates to wills and trusts. When you hire us, we can help you by:
- Determining which types of estate planning documents can meet your needs
- Identifying ways for your loved ones to avoid probate
- Preparing your last will and testament, power of attorney, and other estate planning documents
- Drafting a living will to communicate your medical preferences in the event of incapacitation
- Including beneficiaries in your estate plan, so they receive the assets you wish to leave them
- Working with financial advisors to find ways of reducing or eliminating estate taxes
- Creating trusts to provide for minor children and other heirs
- Setting up guardianships or conservatorships for your dependents
What Are the Elements of a Successful Estate Plan?
Many people think a will is the only necessary document in an estate plan, but many estate plans need other elements, too. Depending on the circumstances, you might want to incorporate one or more of the following elements in your estate plan:
Last Will and Testament
A last will and testament outlines your final wishes, such as your preferences regarding funeral services, asset distribution, who will care for your dependents, and who will administer your estate after you die.
A trust is an arrangement that grants certain parties the right to hold assets on behalf of beneficiaries. With a living trust, you can transfer assets in and out of the trust during your lifetime. No one else has control of the trust if you are the only trustee. You can name a successor to take over the trust when you die and distribute its contents per your instructions.
A living will communicates your medical care preferences if you are ever unable to communicate them yourself. For example, if a traumatic accident leaves you in a coma, your doctors can review your living will to determine how they should handle your end-of-life care.
Power of Attorney
With a power of attorney (POA), you can select an agent to manage your affairs if you become incapacitated. Depending on your situation, different types of POAs could be necessary, including financial, medical, and general powers of attorney.
Parent Contingency Plan
A parent contingency plan is essential if you have minor children. It expresses your preferences regarding who cares for your children if you are incapacitated or die.
If you don’t create a will, power of attorney, or other estate planning documents, the courts could select the wrong person to handle your assets, make major healthcare decisions, or care for your dependents.
What Is a Trust?
A trust is a legal relationship between one party, called the trustor or grantor, and another party, called the trustee. In some trusts, the trustor designates themselves as the trustee. When a trustor sets up a trust, the trustee has the authorization to hold certain assets “in trust” for a third party called the beneficiary. When assets are held in trust, the trustee must manage or disburse them per the instructions in the trust agreement.
What Is Probate Administration?
Probate administration involves verifying a person’s will and managing their estate after they die. During probate, an appointed personal representative must file the deceased’s last will and testament with the court to initiate legal proceedings. The personal representative is often the executor that the deceased nominated in their will. Before probate can continue, a judge must verify the will’s validity and determine whether the proposed personal representative is fit to serve.
The personal representative must notify all creditors and heirs when administering an estate. Creditors can make claims against the estate for unpaid debts the decedent owes when they die. The personal representative must pay off those debts, estate taxes, and other expenses before distributing assets to the estate’s beneficiaries. After fulfilling all their duties, the personal representative can petition the probate court to close the estate.
What Is a Guardianship?
The court can grant guardianship to a person or entity to authorize them to care for a minor child or dependent adult (the ward). A guardian makes decisions about their ward’s social activities, education, living arrangements, healthcare, and other aspects of the dependent person’s life. However, guardianship isn’t always necessary if an estate plan has already established a way to manage a dependent’s financial, medical, and personal affairs, such as a power of attorney.
What Is a Conservatorship?
The court might grant someone conservatorship if a minor or incapacitated adult needs help managing their finances. A conservator is authorized to control their ward’s assets, make financial decisions on their behalf, and handle other financial responsibilities if it is in the ward’s best interests.
What Is Estate Litigation?
When someone dies, sometimes family disputes can arise. For instance, one heir might believe they should receive a specific asset instead of another family member. Another heir could accuse the personal representative of managing the estate for personal gain. Filing a lawsuit (litigation) might be necessary if it isn’t possible to resolve disagreements through mediation or other methods.
Common scenarios that lead to estate litigation include:
- Contesting the validity of a will
- Making or updating estate plans through coercion, exploitation, or undue influence
- Determining which version of an estate plan is the controlling version
- Disputing the specifics of asset inheritance or guardianship
- Claiming the personal representative or successor trustee engaged in misconduct or fraud