Having a well through out, defined estate plan is one of the most important things we can do for ourselves and our families during our life. Without an estate plan, your assets may be thrown into the uncertainty of probate court and legal challenges from interested parties that may feel they are somehow owed part of your estate. Those are just some of the very good reasons to have an estate plan and one that includes more than just a last will and testament.
For starters, an estate plan should include a revocable or “living trust” to pass assets onto friends and family while avoiding probate. Sometimes referred to as an “inter vivos” trust, it is a legal document through which assets are placed into a trust for your benefit during your lifetime and then transferred to designated beneficiaries at your death by your chosen representative, called a “successor trustee.” They are called revocable living trusts because they can be amended at any time and are created during the grantor’s lifetime.
Next, your estate plan will require a last will and testament to pass on any personal or sentimental items not covered by the trust. The will can also give specific instructions for when and how these assets are to be disbursed as well as give surviving family members clear burial instructions and otherwise pass on any other sentiments that are wished to be expressed.
Additionally, your estate plan absolutely must include a durable power of attorney to appoint someone you trust to handle your financial affairs in case you become incapacitated and unable to act on your own behalf. These durable powers of attorney can be limited in scope and time and do not diminish the rights of the person bestowing them as they simply allow another trusted person to act alongside in that individual’s best interest.
Finally, a proper estate plan will include a healthcare proxy to give family members and doctors direction for end of life decisions or situations where you may be in a vegetative state from which you may not return. Similar to a durable power of attorney, a health care proxy is a legal document created during a person’s lifetime while he or she is still competent. In New York state, it is necessary to have physicians sign off on a health care proxy and file certain paperwork with the appropriate Surrogate’s Court.