Basic Estate Planning Questions That People Don’t Want to Ask
Let’s be honest, estate planning can sound a bit intimidating. People often think that they should do estate planning but don’t always understand the specifics. Sometimes they avoid asking questions about the basics when they feel like they “should know.” Sometimes people procrastinate because they don’t understand it or don’t know how much it will cost. Sometimes people go see an attorney for estate planning, leave with documents but still don’t understand what documents they have or even if it really works for their situation. I hope to help with the first set of issues and never leave anyone in the last!
I hope my people always feel comfortable asking me anything but, just in case, I spent some time walking through a few frequently asked questions on the basics of estate planning. The documents discussed below are the building blocks for a solid estate plan. It doesn’t have to be complicated but it does need to be thorough. Last, but not least, I want to point out that the answers below do not include Medicaid planning information. That can sometimes look and sound different than the basics. We can talk more about that another day. For today, the basics…
Why is estate planning important? There are so many reasons that estate planning is important but most reasons fall into two categories-peace of mind and money!
For example, it allows you to document your wishes including how your property will be divided, who you’d like to be guardian of any minor children and who you’d like to make healthcare decisions for you should you become unable to make those decisions yourself. Making these arrangements give you the peace of mind that things will be carried out how you want them to be.
On the money side of things, if estate planning is done comprehensively (and kept up to date) probate costs for your family can often be avoided entirely when you pass away. The average cost of probate attorney fees and court costs are approximately 7-10x the cost of estate planning. For example, comprehensive basic estate planning for a married couple can be estimated at $1,200. If that estate went to probate court and was valued at approximately $250,000 (remember this can include real estate values), attorney fees and court costs are estimated at approximately $8,500. That is nearly $10,000 that could often be left to a spouse, loved one or a cause close to your heart but instead will go to legal fees and court costs because planning wasn’t done or wasn’t done comprehensively.
What does a will do? Your will can be short or very detailed depending on your preferences. You can give broad discretion to your executor or lay out details very specifically. Some of the most important provisions include allowing you to determine how you want your property divided and setting forth the guardian for any minor children. Imagine for a moment, grieving children involved in a custody battle among their family members after losing their parents. That agony can almost always be avoided with a single document…not to mention the attorney fees and court courts that family members would incur while fighting for custody. Your will also tells the court who you want to be in charge of your estate and allows you to bypass bond requirements which saves significant expense and delay. A will alone will not help you avoid probate court but it does allow things to be handled more quickly, at less cost, and pursuant to your wishes.
What is a Medical Power of Attorney? In its simplest terms, a medical power of attorney provides permission for someone else to make your medical decisions should you become unable to make them for yourself. It allows you to provide specific instructions and also allows you to designate an alternate should your primary person be unavailable. This gives the document flexibility and longevity. A medical power of attorney has always been an important document but, as we continue to navigate a global pandemic, some folks now feel very strongly about having one in place and providing some instructions.
What is a Living Will? A Living Will is a legal document that tells medical staff your wishes regarding what lifesaving measures you do and do not want should you not be able to communicate it yourself. Many folks find peace of mind in making those end of life decisions for themselves now and not leaving that burden to family members later.
What is a Financial Power of Attorney? A Financial Power of Attorney provides permission for someone else to act on your behalf including things like banking and signing documents. You can provide broad authority or limit it to certain activities depending on your situation and comfort level. Should you become unable to handle your affairs without a power of attorney in place, a family member may be forced to file for guardianship in order to take care of things for you. This requires a bond and the expense of attorney fees and court costs for your family member. A guardianship is often estimated at $2,500-$3,500 for attorney fees and court costs. A power of attorney costs less than 10% of that as part of an estate plan.
Can my assets transfer without going through probate court? Yes! You can often avoid probate court and the associated costs completely through a bit of comprehensive planning. We can work together to plan and ensure that assets aren’t titled in your name alone, beneficiaries are kept up to date on all accounts and accounts are set up to be payable on death. Even real estate and business interests in an LLC can be transferred upon death outside of probate if properly planned. This allows someone to step in and handle business operations for your LLC independent of probate court and without those additional costs and delay. We can talk more about your specific assets and situation to ensure this is done successfully.
It will be important to keep estate planning in mind as life goes on and things change. New accounts are opened, businesses started, real estate purchased, and spouses or family members listed as beneficiaries pass away. We are here for a bi-annual check in on your estate planning at no additional cost to help ensure those changes are captured and planned for.
Have more questions or need to get your estate planning done? Give me call. I promise to answer your questions , treat you well, and no billing surprises.
