Demystifying the term: Estate Plan | Fendrick Morgan

Demystifying the Term: “Estate Plan”

“I don’t need an estate plan. I just need a basic Will.” I wish I had a dollar for every time someone has said that to me.

Whatever your situation is, it is not simple. It is yours, and it needs attention. Maybe you have minor children. Maybe you have adult children. Maybe you have a disabled child or grandchild. Maybe you have a blended family. Maybe you have a taxable estate. Maybe you have a child who is a spendthrift, has creditor issues or is divorced (or might be). Maybe you are concerned about future long term care costs. Maybe you have a son-in-law or daughter-in-law who you can’t stand. Maybe you have a son-in-law or daughter-in-law who you adore. In any case, your estate plan should be reflective of your personal situation. It is not simple, it is yours, and you should control it.

At its most fundamental level, an “estate plan” includes a Will, a Health Care Directive and a Durable General Power of Attorney. A Will governs who gets your “stuff” when you die and appoints someone to be in charge of the administration of your estate. A Health Care Directive appoints someone to make medical and end of life decisions for you in the event you are unable to make those decisions for yourself. Finally, with a Durable General Power of Attorney, you appoint someone to help you manage your financial affairs. Absent a Will, the state in which you reside will designate how your assets are to be distributed and who can serve as administrator of your estate at your death. That state-imposed estate plan is not likely to be the “plan” that you would want. Absent Health Care and Durable General Powers of Attorney, in the event of your incapacity, guardianship proceedings may be necessary to have someone appointed to make decisions on your behalf; that someone may or may not be who you would want it to be. Take control of your affairs and make a plan.

Next, let me be crystal clear: tax planning does not happen on its own. You cannot rely on your loved ones to take steps to minimize death taxes after you are gone. If you do not take steps during your lifetime to help reduce or, in some cases, eliminate the estate or inheritance tax consequences which may result in your death, your loved ones will not be able to do so after you are gone. Tax laws are forever changing, and they demand flexibility in your estate plan to address the tax laws that may be in effect at the time of your death.

Be proactive. Take away the ambiguity and the uncertainty of not having a plan. Reduce the potential for conflict and family feuding, and make a plan. Let us help you to craft an estate plan that is sensitive to your family situation and mindful of your estate tax exposure.

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