The Three Most Important Estate Planning Tools
Regardless of your family, life, or financial situation, pretty much every adult can benefit from these three estate planning tools:
1. The Last Will and Testament (or, as more commonly known, the will)
Usually, when somebody dies, the estate of that person (the decedent) will have to go through probate. Probate is the process by which a court determines who the decedent’s heirs are. When somebody dies without a will, the court will apply the intestacy laws of the state where the decedent lived to make that determination. In most cases, the heirs will be the closest relatives, and assets will be distributed to a spouse, children, parents, siblings, grandparents, and so on, depending on which relatives are still alive. While a will does not circumvent the probate process, having a will in place allows you to determine who yours heirs are, rather than letting the court do it for you. If you have assets or items that you want to go to certain people, you can draft a simple and inexpensive will that gives instructions to the administrator or executor of your estate (the person who is appointed by either you, in your will, or by the court to administer your will) about how he or she should distribute your belongings and assets. If you have children or pets, a will is also your opportunity to specify whom you would like to take guardianship of them if you die. Without such a guardianship provision, a court will decide who is best suited to take care of your kids (which may not always be who you would want).
The ability to control who gets what after you die is only one of the great things that a will provides. Let’s go back to what I mentioned in the previous paragraph: if you die without a will, the court will have to determine who yours heirs are. This means that the court is going to have to 1) figure out who your living family members are, then 2) apply the state’s intestacy statutes to determine which of those family members gets your stuff. Now, our court system is not exactly known for its speediness and efficiency. What seems like a relatively simple process can easily turn into a time-consuming, and expensive, probate hassle. For example, in Colorado, if a person dies intestate (without a will) with only a spouse and no children, the spouse will get 100% of the estate. Colorado also says that if a person dies intestate with a spouse and a child who is not also a child of the spouse, the spouse and the child will split the estate 50/50. So, let’s say that you do not have a will, and at the time of your death you were married, that was your first and only marriage, and that you did not have any kids. In Colorado, your spouse is your only heir and gets 100% of your estate. Easy, right? Not necessarily. Not only will the court have to make the determination that your spouse is, indeed, your spouse, but it will also have to verify that you did not have any children who may be entitled to half of your estate. On the other hand, if your will specified that your spouse would get everything, the court would not have to worry about whether or not you had some kids running around somewhere because under your will, your spouse is your sole heir. So even though in both circumstances your spouse will get 100% of your estate, having a will makes that process of going through probate and the court determining who yours heirs are much faster, easier, and less expensive.
2. Medical Directives, including a Durable Power of Attorney and a Living Will
Medical directives such as a living will are your way of giving instructions to your family and healthcare providers as to what you want to happen if you are critically ill. A living will allows you to specify what, if any, life-sustaining treatments you want performed if your doctors determine that you terminally ill or in a permanent vegetative state. Having a living will in place will prevent your family from having to make those tough decisions and will give them peace of mind to know that they are doing what you would have wanted them to do.
Similarly, a durable power of attorney for healthcare allows you to appoint an agent to make healthcare decisions for you if you are incapable of doing so yourself. If you are injured or become ill to the point where you are unable to make medical decisions, your doctors are going to look to somebody to make those decisions for you. If you have not already appointed somebody to do it through a power of attorney, your family may have to petition the court to have a court appoint somebody, which can be a lengthy and expensive process.
3. Financial Power of Attorney
Finally, much like a durable power of attorney for healthcare, a financial power of attorney allows you to appoint an agent to handle your financial affairs if you are incapable of doing so yourself. If you find yourself in a situation where you are hospitalized and cannot get to the bank or pay your bills, or if you are incapacitated and otherwise unable to take care of your finances, you will want somebody you know and trust to have the legal ability to do those things for you. Rather than making your family (again) go through the court system to have an agent appointed to take care of your finances, a financial power of attorney allows you to make that appointment yourself, and saves everybody the added time, stress, and expense.
Denver, Colorado estate planning attorney Aiden H. Kramer offers estate planning packages that include a will, general power of attorney, and advanced medical directives starting at just $800. Contact Aiden Kramer at (720) 379-3425 or [email protected].