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Estate Planning is for Everyone
By: Kimberly A. Paton (2000)
There is a general misconception that "Estate Planning"is something only rich people should consider. This is not true. People with wealth do require planning for tax avoidance. Legal Update readers have read about tax avoidance methods in my articles over the last ten years. Tax avoidance is an important goal since taxes can be significant. However, there are other goals that are equally or even more important then tax avoidance. When planning your estate, there are family issues that must be considered by everyone. Our world is very complicated now. There is no "average American family." Families come in all shapes and sizes and can include multiple marriages, children from prior marriages, stepchildren, dependent grandchildren, dependent parents and grandparents, "life partners/significant others" and same sex couples. These are just a few of the possibilities. Every situation requires special planning considerations. You must have the proper estate planning documents that accurately and effectively express your wishes. Otherwise, your true wishes and desires may not be effected. Your assets could be distributed against your wishes. Dependent family members could become wards of the state. Life partners/significant others may be left without adequate financial protection. Finally without the proper planning you may have no input in your medical care or funeral arrangements.
To avoid these unfortunate possibilities, every estate should include:
Will. To name an executor you trust to distribute your assets to your beneficiaries in the proportion you choose: to establish trusts for minors, incompetents and elderly on terms that you choose; to name trustees that you choose to protect your beneficiaries.
Living Will. To express your wishes in the event of a catastrophic illness or injury when the doctors do not expect a recovery. This also names an agent you choose to review the medical information with the doctors and to effect your predetermined wishes. This agent can be your life partner and not your legal next of kin.
Power of Attorney ("POA"). To authorize an agent you choose to act on your behalf to protect you and your assets in the event you are unable to properly deal with your affairs, including financial and medical issues. This can be a "General Durable" POA which will be effective on signing and will continue in effect even if you become incompetent; or a "Springing" POA, which grants no legal authority unless and until you become incompetent. Again, your agent can be your life partner instead of legal next of kin.
None of these documents are not contingent upon the value of your estate. However, they can save your family extraordinary expense and turmoil in the event of your death or illness. If you do not take the proper steps to express your wishes and protect your assets and family, litigation is possible and family relationships can easily be destroyed. Remember that you have worked too hard for your assets and family harmony to risk these by improper or inadequate planning.
Different family members may have different expectations, different thoughts of "what you would want". Adult children may expect an immediate inheritance upon your death or that they would be named as your agent under your POA or Living Will. Similarly, your current spouse, life partner, may expect that he or she will receive the immediate inheritance for financial security and be named as the agent under your Power of Attorney or Living Will.
Many of these issues are further complicated for a life partner or significant other since there is no "legal" relationship and therefore he or she has no legal right to demand to be executor under your Will or agent under your Living Will or Power of Attorney or to receive any inheritance from the partner. This can be still further complicated with a same sex life partner, if your family has not accepted your lifestyle. (Remember too, that with life partners there are more inheritance tax issues to be considered and planned for.)
Various family situations can create very complicated family issues that should be addressed in your estate planning documents. At times, these complexities can seem overwhelming and therefore may prevent you from addressing same.
We have experience addressing all issues involving various family situations and planning difficulties. After reviewing your situation and your goals, we can present you with a plan to help resolve all of the issues.
Kimberly A. Paton is a partner at WJ&L, LLP who heads up our Estate Planning, Probate and Elder Law practice.