Court documents for clients who need an estate plan.

Who needs an estate plan?

Creating a will or a trust as early as possible is an important part of end of life planning — after all, we want to ensure that those we care about the most are well-cared for.      

Without careful planning, your beneficiaries will likely run into legal or administrative snags during this very emotional time. 

So who really needs an estate plan? Read on to learn more about estate planning and who should create an estate plan. 


Wills, Estate Plans & Trusts: What’s the difference? 

 An estate plan is a comprehensive plan set out to accomplish four primary goals:

  1. Define how assets will be managed/distributed after the death of the grantor (person creating an estate plan).
  2. Define who will be in charge of the assets.
  3. Minimize the expense and effort required to implement the estate plan (taxes, attorney fees).
  4. Establish who will make legal, financial and medical decisions if the grantor is incapable.

An estate plan is then carried out via the necessary legal documents — namely trusts and wills — which are required for the person in charge is able to carry out the wishes of the grantor. 

These papers serve as both official proof and clear directives for all parties involved. 

The most common documents include: 


1. Trust 

A trust is a legal document which directs management and ownership of a grantor’s assets while they are alive. 

Upon death, the ownership of the trust is owned by the “trust,” which then distributes assets to heirs (beneficiaries) per the instructions of the grantor. 

The trust may include restrictions to assets, or it may offer the assets outright to the heirs and beneficiaries.

The two big advantages to having a trust include avoiding probate and management of assets post death.

Trusts can be Revocable (changeable) or Irrevocable (not changeable).

See: What assets go through probate?


2. Will 

A will is a legal document that allows an individual to specify what happens to their physical body and processions after they pass away. 

If someone dies without a will, state law will dictate the funeral proceedings and who the heirs will be. 

A person dying without a will will not be able to direct inheritance to anyone other than the immediate family regardless of the wishes of the decedent. 

A will must go through probate — but when it does, this can be cumbersome and expensive for heirs.

See: Does creating a will avoid probate?


3. Durable Power Of Attorney (POA) 

A Power of Attorney allows the person nominated to legally act on behalf of an individual. 

For instance, a person with a durable power of attorney usually has the capacity to: 

  • Open/close accounts 
  • Sign legally binding documents
  • Instruct transactions in financial institutions  

This power can be broad or specific depending on how the POA is drafted. 

Using the term “durable” is important as it denotes that the power continues to be held, even if the individual granting the power is incapacitated; if this term is not specified, the power will cease.


4. Durable Medical Power Of Attorney 

A Durable Medical Power of Attorney document is similar to a POA, but is specifically for medical decisions. 

Many people have an advanced directive (also known as a living will) that provides guidance on medical issues. These provide helpful guidance, although they are not legally binding. In fact, most hospitals will ignore them. 

The Durable Medical POA is the only document that legally grant authority to someone else to make medical decisions.

A comprehensive estate plan will utilize all of the above documents to accomplish the wishes of the grantor. Additionally, it will ensure that beneficiary designations (for Retirement accounts and Life Insurance) are updated. Often, the trust is designated as the beneficiary. 


5 Easy ways to avoid probate

Probate is the legal transfer of assets that are in the deceased single name and did not automatically transfer to someone else and require a court order to transfer.  

Everyone should think about how their care should be managed in advanced age and how assets will be distributed after death — especially when it comes to probate, which can often be avoided.   

If people truly understood the stress and time involved in the probate process, we would do everything in our power to ensure our loved ones avoid probate!

See: 6 Steps to avoid probate

There are many strategies for avoiding probate. Here are a few things that you can prepare for FREE.


1. Transfer On Death Designation (TOD)

This is a designation similar to a beneficiary in a retirement account where the designated person(s) will automatically become the owners of the asset. 

These forms are available in all financial institutions, and are free to implement.


2. Update Beneficiary Designations

Retirement accounts and Life Insurance have beneficiary designations that will allow the automatic transfer of the Account/Insurance to the beneficiary without probate.  

It is important that beneficiaries are used and updated or the account/insurance will otherwise be payable to the estate and then requiring probate.  


3. Lady Bird Deeds

A “Lady Bird Deed” have a transfer on death designation incorporated into the deed, assigning the property to others after the death of the first owner.  

Since the deed does not need to be changed and the transfer is automatic, the property governed by such a deed will not go through probate.  


4. Trusts

As mentioned above, trusts are legal documents that help with the management and transfer of assets.  

It is important that the trust become the owner of the assets in order to be effective, otherwise the asset still has the original owner and upon death will be a probate asset.


5. Joint Accounts With Rights of Survivor

Changing bank or investment accounts to a joint account with rights of survivor will avoid probate as the survivor owner becomes the 100% owner without probate.  

This strategy has significant risks and drawbacks — the main one being that the other person becomes an immediate owner and can withdraw assets as if they were their own.  

Additionally, creditors can “attach” the asset to their claim.  

This should only be used with the most trusted people, and frankly it is never recommended by professionals (a TOD is much better).


Why have an estate plan?

Having a well-thought-out estate plan essentially eases the burden of your loved ones who will inherit your assets, and can also help save you from administrative and legal problems should you fall ill.   

When you have a clear plan in place, it means that all of your assets have been legalized and beneficiaries confirmed.  

Here are some of the benefits of having an estate plan:  

  • Ensures that all of your assets are divided properly  
  • Minimizes taxes and other costs associated with end of life 
  • Ensures that laws aren’t going to supersede your preferences
  • Makes sure your family is clear on what is to be passed on or divided
  • Makes sure the estate is transferred quickly and efficiently  
  • Helps all parties get clear on current asset management 
  • Ensures that your family is protected should the estate holder fall ill
  • Helps ensure that all parties have access to correct and updated documents (Enduring Power of Attorney, Trusts, Last Will and Testament)
  • Helps ensure that taxes are handled and minimized  
  • Helps to ensure that expenses directly related to death (such as funeral costs and probate fees) are managed appropriately and in advance 

Estate plans have the potential to be detailed and extensive, which means that they can take more time at the outset. 

But you must keep in mind that this is an important investment in your future, and will most likely save your beneficiaries a ton of time, money and emotional stress. Perhaps most importantly, having an estate plan will help you to streamline the probate process and help prevent unnecessary costs and delays.

See: Why you need an estate plan right now


Estate plans can prevent probate delays  

Conducting a thorough assessment of all of your assets can help you and your loved ones understand the best course of action to take with regards to probate and state laws.  

In this way, you may use an estate plan to ensure administrative and financial snags are prevented, and probate is not delayed. 

Do you have questions about estate planning and the probate process? Book a confidential call with us today — we’re happy to help.