Estate Planning Essentials

Current Will - The most important legal document in your estate.

Health Care Proxy - Designates someone to make health care decisions on your behalf in the event you no longer can.

Durable Power of Attorney - Gives someone else permission to manage your affairs if you become disabled or incapacitated.

Revocable Trust - Pass assets to your beneficiaries without the delay or expense of probate.

Updated Beneficiary Designation Forms - Your beneficiary designations often supersede provisions in your will, so make sure they reflect your current wishes.

Transfer on Death Registrations
- Allow mutual fund and brokerage accounts to pass to your beneficiaries upon your death without the time and expense of probate.

Life Insurance for final expenses
- Make sure your estate has the ability to meet the immediate cash requirements that will arise at your death.

529 Plans
- Helps you provide for a beneficiary's higher education while affording you unique federal, income, gift and estate tax benefits.


The Foundation of Your Estate Plan Begins with a Current Will

Your will is the most important legal document in your estate. It establishes your wishes and provides direction on how they should be executed after your death. Yet, many Americans die intestate, that is, without a will. More than any other tool, a will spares your survivors unnecessary work and expense. That's why it's important to work with an experienced attorney to prepare this basic written document.

Your will should:
- state how you wish your property to be distributed at your death, if the property does not pass outside your will
- name an executor (also called an executrix or personal representative) for your estate
- provide for the payment of costs incurred in settling your estate.
- If you have minor children, your will should also:
-– designate a guardian for your minor children
-– name a trustee to protect your children's inheritances

Keep in mind that even though you have a will, you'll also want to be aware of your state's inheritance laws. If you have complicated family relationships, speak with your attorney about additional legal documents, such as pre- and post-nuptial agreements that may be used to strengthen any position you establish with your will.

Revisiting your will

Once you have a will, it's important to revisit it regularly, such as every three to five years. However, certain life events should trigger an automatic review:
- marriage
- birth or adoption of a child or grandchild
- significant changes in financial circumstances
- death of executor or guardian
∑ change of residence to a new state or country

You should store your will, and other important documents related to your estate (including your durable power of attorney, health care proxy, and trust documents in a safe place where they will be easily available. If you store them in a bank safe deposit box, they may not be easily accessible to your beneficiaries after your death. Also, make sure to tell your named executor or trusted family members where these documents can be located.

Use the organizer to consolidate your information regarding your estate.

Consider Documenting Your Wishes for Your Future Medical Care

A health care proxy (also known as a durable power of attorney for health care or patient advocate designation) is a type of power of attorney that gives a person you designate permission to make health care decisions on your behalf if you are unable to do so in the future. You may also want to consider drafting a living will or health care directive, which will express your wishes to your doctors when considering the use of life-sustaining procedures.

When assigning individuals to act on your behalf under a durable power of attorney for health care or health care proxy, it's important to communicate your wishes with them and to choose alternates in case they are unable to represent you

Prepare for the Unexpected with a Durable Power of Attorney

Your will provides for key decisions to be made in the event of your death, but what if you should become disabled? Or, what if your parents should lose their ability to make sound decisions while they're alive? With a durable power of attorney, another individual can step in to manage your affairs. This person can be your spouse, partner, or any one you trust. A durable power of attorney can apply to all your affairs, or be limited and apply only to particular assets or accounts you own. It can take effect immediately or at the time of your incapacity, but must be established while you still have your mental faculties. You cannot create a durable power of attorney once you become incompetent and it is revoked when you die.


Revocable Trust

A revocable trust, which may also be referred to as a living trust, can be an efficient mechanism to pass assets to your beneficiaries. Although assets in a revocable trust are subject to estate taxes, you may want to establish a revocable trust for other reasons:

- As a way to maintain privacy and reduce the cost of probate, which in some states can amount to $40,000 on an estate of $1,000,000
- If you own real estate in more than one state, you may save your heirs, executors or personal representative both time and money by placing the real estate in a revocable trust. Otherwise, property will have to pass through probate in the state in which it is located - which can be a costly and inconvenient process

A revocable trust is a flexible arrangement you can change or dissolve at any time. You can name yourself trustee (or co-trustee) and retain control over the trust, its terms and assets. As a trustee of your revocable trust, you may continue to manage assets contained in the trust during your lifetime, but make provisions for a successor trustee to manage them in the event of your incapacity or death. Fidelity non-retirement accounts may be registered in the name of your revocable trust. A funded revocable trust may be used to avoid probate.

You cannot designate a revocable trust as the owner of your retirement account since a change in ownership would constitute a taxable distribution and eliminate its favorable tax treatment going forward. Properly designated beneficiaries enable you to pass your retirement account assets to the individual(s) you wish without the expense, delay and public record of probate.

Updated Beneficiary Designation Forms

Assets in your retirement accounts pass directly to the beneficiaries you've designated with your account custodian, trustee, or plan administrator. As a result, these assets may escape the legal process known as probate, provided you've properly designated a beneficiary(ies) other than your estate. Further, these beneficiary designations can supersede any accommodation you have made in your will for the disposition of your retirement account. So be sure all of your retirement accounts, insurance contracts, annuity contracts etc. have up-to-date beneficiary designations to reflect your current wishes. Also, if you are married, keep in mind that most employer sponsored retirement plans automatically designate your spouse as the beneficiary unless you name another beneficiary(ies) and your spouse has consented in writing.