Regardless of someone’s age, income, priorities, family situation or wealth, estate planning is tremendously important. The preparation of a will, powers of attorney over health care decisions and financial decisions and a health care directive (sometimes referred to as a “living will”) is essential for everyone. Other planning considerations are undoubtedly important, but these four core documents make up the basis of anyone’s estate plan.
Effective and timely estate planning provides benefits for the individuals undertaking the planning as well as their family, friends and other loved ones. Addressing critical life events and decisions before they occur accomplishes three paramount goals: (1) the discussion and consideration of these topics fosters thoughtful and deliberate decisions, (2) proper counsel and preparation will lead to the most desirable results from the standpoint of personal preferences, convenience, efficiency and tax potential reduction, and (3) an individual can rest assured that their wishes will be carried out in the event they are unable to make decisions for themselves.
Fortunately, the preparation of these four basic documents is not an overly burdensome or expensive process. We frequently prepare these documents in a relatively short timeframe and offer a quite reasonable fee, especially if your situation and desires are not overly complicated. While each family and individual–and each estate plan—is entirely unique and requires personal consideration and attention, there is no doubt as to the importance of appropriate planning.
When I meet with any individual or family, it is so important to help them understand what estate planning options are available. I view my role as being to first, explain and answer questions, and second, make recommendations from which they can choose in a knowledgeable way. This is never more evident than when I discuss the virtues of having a trust as part of an estate plan. Not everyone needs a trust. Not everyone wants a trust. However, there are some clear benefits to a trust, which, in many cases, match the goals and preferences of my client. While each situation and each individual or family is truly unique and requires unique consideration, there are a few key potential benefits to having a trust in place that will be important to understand in order to make the best and most informed decisions:
- A trust helps avoid probate. There are various tools and possibilities to avoid the expensive and lengthy probate process, but no approach is more thorough and complete as having a trust in place.
- A trust allows for directed giving. A trust can provide detailed directions as to how and when property or money is distributed. This can be done in great detail or in broad generalities. The key is lots of flexibility.
- A trust can protect young, immature or incapable family members. When children or other beneficiaries are young or are otherwise not well-suited to receive a significant inheritance, a trust can be vital in protecting them and protecting your assets.
- A trust may be utilized to minimize taxes. In some instances, a trust can be a key part of a plan to minimize applicable gift and estate taxes.
- A trust may be able to shield assets from liability. In some cases, a trust can be set up and administered in such a way as to shield the assets of the trust from your potential liability if you were to be sued. This requires specialized planning but can be a valuable option for some clients.
- A trust is private. Unlike a Will, a trust and its contents and distribution provisions will not generally become public and will not be handled by any court.
- A trust can make things easy. One of the key benefits of a trust is the capacity to make administration and distribution easy and straightforward after the death of the person that created the trust. This sense of efficiency and simplicity is a major benefit to many clients.