Financial Matters

Estate Planning: Control Your Money Before and After you Die

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Part of financial planning includes planning for the end of life. It is not something one likes to think about but after working years to accumulate wealth, you should take some time to plan what happens to it at your death. You can control what happens to your money after you die by taking the time to create an estate plan.

What is an estate plan?

An estate plan is the result of anticipating and planning for the distribution of your estate at death. There are certain documents which are typically included in an estate plan; a will, a trust, a health care power of attorney, and a durable power of attorney. 

A person can write his own estate plan. Some documents are available online and can be downloaded and filled out. Those documents generally include a will and powers of attorney. Some state specific documents are made available by state bar associations for the public. While a do-it-yourself approach may work for some, the best option is to consult with an estate planning attorney.

ESTATE ATTORNEY

Consulting an attorney is advisable for larger estates, estates with numerous beneficiaries, and/or when minor children are involved. In most of these scenarios, the attorney may advise a trust be created. There are many different types of trusts, so the expertise of an estate attorney will be necessary to properly draft and fund a trust.

THE TRUST

A trust is a legal document created by an individual who owns property, to allow a trustee to hold the assets on behalf of beneficiaries. For people with children or with larger estates, they might want to control how and when the assets of their estate are distributed. One way this can be done is to create an estate plan that states upon one’s death, their assets go into their trust.

Once the assets move into the trust, the trustee will then have power to distribute the trust property in accordance with the terms of the trust. Remember, the trust is written by an individual and has specific language regarding who gets what and when. A trust can name specific people, organizations or charities. A trust can say how much money goes to each, and a trust can say when.

Trusts are used by individuals, families and corporations and range from more simplified living trusts to complex irrevocable trusts. Only an attorney can determine which type of trust will be best suited for your situation.

For most families an attorney would likely recommend a revocable trust, meaning the provisions of the trust could be changed at any time before the death of the creator of the trust. Since families change and grow, the option to change beneficiaries or distributions is an important feature. 

A parent’s worst nightmare is to pass away while their children are young. Imagine the tragedy is compounded by the possibility of minor (under 18 years old) children getting access to large sums of life insurance and other assets upon a parent’s death.  This situation is avoided by the creation of a trust. For parents with minor children, the specificity of a trust allows parents to control at what ages money is distributed to their children.

THE WILL

A will is separate document from the trust document. It is different from a trust because a will goes into effect after someone dies. It says who gets your property and it appoints someone to carry out your wishes. When you write a will you decide who gets what after you pass away. If you write it yourself it is called a holographic will. Will formats can be downloaded from the internet but be careful to make sure you are using one specific for your state. Again, consulting an estate attorney instead of doing-it-yourself will avoid any mistakes in your estate plan.

But what if you pass away and haven’t written your will? When this happens it is called dying intestate. Unfortunately that happens all too often so courts must step in to decide what happens to your possessions. This process is called probate and proceedings are held in Probate Court. Each state has its own rules about how property gets distributed if a will is not written. Your property may pass to your children, parents, or other nearest relative. It may even go to the state if no relative can be found. Since most people know someone they would like their property to go to, the way to make sure this happens is to put it in a written will.

POWERS OF ATTORNEY

This document gives someone else the power to make decisions on your behalf. There are many different types of powers of attorney that can be used under different circumstances. Powers granted can be general or specific in scope. Powers can also start immediately when signed, or be limited to only start when something happens, like the person granting the power becomes incapacitated.

When it comes to estate planning the most common is the durable power of attorney. The purpose of a power of attorney to grant to someone legal authority to assist them with their financial and health care matter, particularly if they ever become incapacitated. 

If you need a power of attorney, some forms can be downloaded from the internet. Again, make sure that you are using a form specific to your state. If you are admitted to a hospital you might be asked if you have a healthcare power of attorney and if not, they might have a standard form you could sign. Just like with your will and trust, it is best to consult with an estate planning attorney to make sure you have drafted the proper powers of attorney for your needs.

REVIEW

Your estate plan is your desire for what will happen to your possessions and assets when you pass away. Since you may also suffer incapacitation after an illness or accident, your estate plan should also address this possibility. Therefore your estate plan should include your will, powers of attorney and possibly a trust. The important thing is to take the time to think about these important issues before tragedy strikes and make a specific plan for your assets. In order to help assure your wishes will be carried out they should be in writing. Just telling someone your wishes might not be enough.

Once you make the commitment to do an estate plan get professional guidance from an attorney who specializes in estate planning. The laws vary state to state, so work with an attorney in the state where you live.

FINAL TIP

In order to find an estate planning attorney in your area consult with your state bar association. Most have websites which will allow you to search by specialty.

Asalyn Coachman is a Registered Representative of and offers Securities through The O.N. Equity Sales Company, Member FINRA/SIPC, 39395 W Twelve Mile Road, Ste. 102 Farmington Hills, MI 48331 (248) 482-3600. Investment Advisory Services offered through O.N. Investment Management Company. Financial Architects, Inc. is not affiliated with The O.N. Equity Sales Company or O.N. Investment Management Company.

Asalyn earned a degree in Economics from Harvard University and a law degree from the State University of New York at Buffalo. She lives in Lake Orion with her husband and two children where she is active in organizations such as the Harvard Club of Eastern Michigan, Lake Orion Schools, and the Baldwin Center of Pontiac, Michigan, where she serves as board president.

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