The Difference between having a Will and having an Estate Plan

estate planMost people know that a Will is something you should have so that your estate (the stuff you leave behind after you die) is dealt with in accordance with your wishes.  And while having a Will is definitely better than not having one, it is only a small part of what a person needs.

When death or physical or mental incapacity occurs, it is always a shock and quite upsetting, regardless of whether we saw it coming or it happens suddenly.  Having a plan does not remove this shock and upset, but it does smooth the way ahead by removing the uncertainty about what comes after.  Lawyers call this an estate plan.

Here are just some of the issues to be considered in thinking about death or incapacity:

  1. Who should make decisions for you if you become physically or mentally unable to make decisions for yourself?
  2. Where do you want to live if you become incapacitated?  Some people want to continue to live at home for as long as possible.
  3. How do you want your property and money handled if you are incapacitated?
  4. What are your priorities for your medical care if you are incapacitated?  What do you want done if you may recover?  What about if recovery is not likely?
  5. When you die, who should be responsible for administering your estate?
  6. Do you have money set aside to pay your debts?  If not, do you have any priorities as to what assets should be used for this purpose?
  7. If you own a business, should it continue or should it be shut down if something happens to you? If it is to continue, who will run it?  How do you envision the transition to new leadership?
  8. If you die or become incapacitated, how do you want your home dealt with?  Should it be transferred to someone else, sold or rented out?

When you have some answers to these questions, then you are ready to make a plan.  The three main components of an effective estate plan are:

  1. Power of Attorney.  This document gives another person authority to manage your property and finances if you become incapacitated.  This can include the power to deal with real estate that you own, as well as corporate interests.
  2. Personal Directive.  This document (sometimes referred to as a “Living Will” or an “Advanced Medical Directive”) provides instructions relating to medical care and other personal matters such as where you may want to live and what type of care you want, and don’t want,  if you become incapacitated.
  3. Will.  This disposes of your property after death, to the people that you want to benefit.  It can deal with a wide variety of issues such as businesses, creating trusts for minors, dealing with blended family situations, and so on.

Key to an effective estate plan is having all of these documents designed to mesh together to ensure that your priorities are respected and maintained.  A wide range of possible contingencies are considered and planned for so that you have comprehensive coverage and peace of mind.

The people that should participate in developing an estate plan include:

  1. Your lawyer, who can prepare the key documents noted above, as well as complementary documents such a corporate agreements to deal with the business aspects of death or incapacity.
  2. An accountant, who can discuss with you the tax implications of various options available to you for dealing with your assets during your lifetime and following death.
  3. An insurance broker, who can help you explore the options available for income replacement in the event of disability, and lump sum monies available to pay debts or provide for others in the event of death.
  4. A financial adviser, who can help you to invest to meet your financial goals, diversify and maximize the return on your investments at a level of risk with which you are comfortable.

At Patriot Law Group, we are poised to assist in the creation of estate plans, and to put you into contact with any of the types of professionals about that you may need to assist you.

Posted by Ed Gallagher

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