Why should you plan your estate now?
Choose to plan your estate before you are forced to plan it by the pressures of poor health, time constraints, or other difficult or stressful situations.
Every adult should have an estate plan. Your estate plan should provide for the management of your financial and personal affairs if you are unable to do so, and for the disposition of your estate after your death.
It is also important to plan for the possibility of becoming disabled and unable to carry on your financial affairs. Failure to plan for disability by using such documents as powers of attorney, living wills, and trusts often results in more expense, inconvenience, and distress than a failure to plan for death.
Your estate plan may consist of some or all of the following documents:
General Power of Attorney: A General Power of Attorney authorizes a person or business to manage your financial affairs for you if you lose the ability to do those things yourself.
Advance Directive for Health Care: An Advance Directive for Health Care authorizes someone to make medical decisions for you if you are unable to do so. If you do not make an Advance Directive, your family members may be forced to ask a court to have you declared to be disabled (incompetent), and to appoint a conservator to manage your financial affairs and/or make healthcare decisions for you. Conservatorship proceedings are expensive and slow, and a conservatorship is cumbersome and expensive to manage. They are usually commenced in a time of great distress for a family, such as when a family member has had a stroke, or is beginning to exhibit symptoms of Alzheimer’s disease. No family should have to deal with the expense and stress of legal proceedings at such a time. Advance Directives for Health Care, on the other hand, are signed before such a problem arises. They are much less expensive than conservatorship proceedings, and they are intended to make court proceedings unnecessary. An Advance Directive for Health Care also states your wishes for your end-of-life medical care if you are unable to make medical decisions and if you have a terminal condition. An Advance Directive relieves your family members of the burden of having to make the decision to terminate or not begin artificial life support, because you have already stated in advance the circumstances in which you want or do not want artificial life support. Advance Directives for Health Care were created by the Tennessee health care industry, and they are recognized by health care providers across Tennessee. They replace Powers of Attorney for Health Care and Living Wills.
Will: Everyone should make a Will. A Will tells the person who will carry out your wishes what to do with your estate after your death. A Will must be presented to the Probate Court and established as the Will of the person who made it before it is legally effective. This process of presenting a Will to a Probate Court and establishing it as a deceased person’s Will is called “probate.” You can read more about “Probate and Estate Administration” here.
Revocable Living Trust: More and more people are interested in avoiding estate administration (probate) proceedings by transferring their property to Revocable Living Trusts before their deaths. Estate administration proceedings can be lengthy and expensive, but that is not always the case. Many times they are relatively quick and inexpensive. Avoiding estate administration proceedings is almost always a desirable result, but a Revocable Living Trust also provides for the management of your estate before your death. The person or business who carries out your wishes as stated in your Revocable Living Trust is called the Trustee. A Revocable Living Trust does not provide a legal means for avoiding income taxes, but it can include provisions to reduce or eliminate taxes on your estate after your death. It cannot shield your assets from your creditors. A Revocable Living Trust can also provide for the management of property for the benefit of minor children and/or persons who are disabled. If you have minor children, you should create a Trust for the benefit of your children because children cannot own property. The Trustee can manage the property in the Trust for your children and distribute the property to them at times selected by you. For example, you may provide that the Trustee will pay your children’s college expenses, and distribute one-third of any remaining portions of their shares to them when each of them reaches age 25, one-half at 30, and the remainder at 35.
Special Needs Trust: A “Special Needs Trust” may be established to provide for a disabled person. This type of trust is used to hold funds for the benefit of the disabled person while he/she is receiving government benefits. The Trustee can use the funds in the Trust to provide for the disabled person’s needs which are not covered by the government benefits. If a Special Needs Trust is not established for the disabled person, leaving money and/or property directly to the disabled person may cause him/her to be ineligible for government benefits until the money and/or property have been spent for the person’s needs.
Nomination of Guardian of Minor Child: If you have minor children, you may designate the person(s) whom you wish to be the guardian(s) of your children in a written instrument. By signing such a written instrument, you, not a judge, determines who will be your children’s guardian. If you do not sign a document designating the person(s) whom you wish to be the guardian(s) of your minor children, a judge will appoint a guardian who will likely be a member of your or the other parent’s families.
Estate plans may be relatively simple or extremely complex depending on the value of your estate and the complexity of your plans for the disposition of your estate after your death.