If the little hairs on your arm stand up when you think about preparing a Last Will & Testament or any other document that addresses your death or incapacity, please know that you are not alone! Fortunately, you do not need to feel that way! The feeling originates from anxiety and fear of the unknown. Most people do not realize that the “thinking” about it is the toughest part of addressing your estate planning concerns. Since most people experience this anxiety, they never have the pleasure of realizing that proper estate planning can, and most often does, provide them with a great sense of peace of mind. That’s right, just the opposite of the initial thoughts! Who doesn’t enjoy peace of mind?
WHAT IS ESTATE PLANNING? If I were to stop a stranger on the street and ask what their idea of estate planning is, I would imagine I would receive the expected answer: “Making sure you have a Last Will & Testament in place.” Certainly, making sure you have a Will in place is part of it. However, that is only a small part of it. An executed Will that meets the proper testamentary formalities of the state in which you reside will ensure that your assets pass to your intended beneficiaries upon your death in a smooth manner. A Will also can provide for the care and wellbeing of your pet, which is discussed in more detail, below. A Will also ensures that you choose who manages the administration of your Will when you are gone. This is a choice always better left to you, not the State where you reside.
However, that begs the question: What exactly is estate planning? In my professional view, a complete “estate plan” consists of four parts: 1) the documents that ensure that YOU and YOUR WELLBEING are taken care of during YOUR lifetime (for example, in the event that you were to become incapacitated); 2) the documents that ensure that your wishes for distribution of your assets are met at your death, whether it be a Last Will & Testament or Revocable Trust; 3) correct titling of assets (joint assets (unless titled as “Tenants in Common” do not pass under your Will); and 4) correct beneficiary designations for all life insurance, annuity contracts and retirement accounts (these are considered “contract accounts” which simply means that they pass to your beneficiaries by a written agreement – beneficiary designation – rather than your Will). In order to ensure that your intended beneficiaries receive their inheritance according to your wishes, it is imperative that your Will or Revocable Trust, asset titling and beneficiary designations are coordinated to work together. If these pieces are not coordinated, assets can pass in unintended directions. If you do not have a Will in place at the time of your death, the State where you reside gets to decide who receives your assets, as well as who gets to administer your estate as determined by that state’s intestacy statutes.
HOW DO YOU MAKE SURE THAT YOU, AND YOUR AFFAIRS, ARE TAKEN CARE OF DURING YOUR LIFETIME? As mentioned above, knowing that you are taken care of and that your daily life needs are taken care in the event of your incapacity not only makes the lives of your family and/or close friends easier if that time comes, but it can provide you with great peace of mind. So what documents do you need to have in place in order to ensure your care and to give you this peace of mind?
There are two types of basic documents that every adult should have in place: The first necessary document, in no particular order, is the Advance Directive-Living Will. This document goes by several different names, such as Health Care Proxy, Health Care Directive, Health Care Power of Attorney, etc. This document, along with a HIPAA (“Health Insurance Portability & Accountability Act” – the “privacy” law that we all are very familiar with) document or clause, helps you with your medical affairs if the need arises. First, it lets your family and/or friends know your wishes in the event something happens that your quality of life will be affected, or there is no hope for continued quality of life. Would you want to be kept alive by heroic measures? Would you want to be kept comfortable and free of pain? These are some of the toughest decisions that your family will ever have to make. When you have this document in place, it takes that difficulty away from them. Second, this document designates someone to make health care decisions for you in the event that you cannot, in line with your wishes discussed above.
The second necessary document is a General Durable Power of Attorney. A Power of Attorney is a document that ensures someone that you designate, usually a trusted family member or friend, can handle your financial affairs for you, such as paying bills, filing income tax returns, entering safe deposit boxes, etc. WHEN AN INDIVIDUAL HAS BOTH AN ADVANCE DIRECTIVE-LIVING WILL & GENERAL DURABLE POWER OF ATTORNEY IN PLACE, THAT INDIVIDUAL’S FAMILY DOES NOT NEED TO PROCEED WITH A GUARDIANSHIP PROCEEDING IN THE EVENT OF THAT INDIVIDUAL’S INCAPACITY.
PLANNING FOR YOUR BELOVED PET. When an individual generally thinks about their estate planning and their intended beneficiaries, pet owners generally aren’t aware that they can provide for the continued care of their pet. Most people may also not know that a “pet” is generally considered tangible personal property under state law, as sad as that sounds, and not a living, breathing member of the family. The good news, however, is that most states allow for you to benefit your pet upon your death, as well as family members and other individuals or charities. In addition, you can also provide for your pet during your lifetime in the event that you are no longer able to care for it, due to incapacity or financial constraints. If a person does not consider and follow through with making planning arrangements for their pet, tragically the pet may end up in a shelter, or worse. Planning for your pet also ensures your peace of mind. There are documentary ways to provide for your pet (executing the proper documents, be it providing for a pet trust in your Will or Revocable Trust, executing a limited power of attorney, leaving a specific monetary bequest to a caretaker, etc.). There are also less “official” ways to provide for your pets care and well being. Please e-mail me if you have any questions or if I can be of any assistance to you. We handle matters in New Jersey, New York and Pennsylvania.