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Why Estate Planning Is Important

On Behalf of | Oct 28, 2019 | Estate Planning

When a person dies without leaving a will, it is called intestacy. When one dies intestate, their estate enters probate, a legal process in which one’s property is identified, inventoried, and distributed to heirs. Probate is a “one-size-fits-all” system that does not account for one’s intentions for their property after death.

Probate takes an extremely long time. Heirs do not usually have the 12-18 months that the average probate takes to wait for the means to make mortgage payments or run the deceased person’s business. Additionally, probate is expensive. Probate executors and attorneys collect fees based on the gross value of the estate, which does not take into account mortgages or other debts owed.

Unmarried or unrelated couples lose out on many other protections afforded to married or registered couples. Anyone can become incapacitated without warning. Without properly executed legal documents, your best friend or partner may not be able to visit you in the hospital, let alone make healthcare and financial decisions on your behalf. Sometimes, the chosen or trusted decision maker is cut off from their loved one with no input in matters of medical care or funeral arrangements.

It should be a primary concern for single people and legally unrelated couples to retain these rights through estate planning, affirmatively choosing who will be a successor decision maker and insuring the protection of their assets and establish security for their loved ones.  If you are not sure who might be that person for you, please feel free to schedule a meeting with us to discuss.  Many people want an independent person such as a licensed fiduciary to fulfill that role.  We can help you find the right person should you need.

Estate Planning: Planning Ahead

Estate planning is both about passing assets to heirs and making sure you are protected in the event of an incapacity.

Whether your estate is valued at $1,000,000 or $100,000,000,  executing the proper documents is important. Planning ahead decreases the chances of the courts getting involved, saving your partner, friend or family unnecessary emotional and financial hardship. There are several ways to accomplish this.


Wills are documents where individuals – known as “testators” – identify who their property will be given to when they die. In a will, you can choose to leave your property to whomever you like, including your partner, children, charity and friends. Wills also allow you to name a guardian for your minor children upon your passing.

However, wills have disadvantages.  Property conveyed through a will is subject to the probate process, which is costly and time-consuming. Secondly, wills can be more easily contested by the family of the decedent, especially when the decedent’s property is left to someone else or charities. Finally, wills are public, which means that anyone can look up your will at the courthouse after you die and find out how you distributed your property and the value of your estate.

Living Trust

A living trust allows for a much less expensive and more time-efficient transfer of assets upon death, without involvement in the probate system. Because title to your assets is owned by the living trust, there is no “estate” to probate you upon your death. Additionally, living trusts are private so no one except the beneficiaries may find out how you distributed your assets. Further, a living trust that is properly executed is less likely to be overturned by a court if it is challenged.

Power of Attorney

A Power of Attorney is a document that allows you to designate the person or persons whom you wish to control your finances in the event that you are incapacitated. This allows your designated  person to pay the bills, collect money that you may be owed, access bank accounts, and communicate with companies or organizations that you may have business with or investments in. You may tailor your power of attorney to include as many or as few different transactions as you wish. The financial power of attorney can be durable, meaning that it goes into effect immediately, or springing, going into effect only if you become legally incapacitated. Depending on your circumstances, you may need a power of attorney that contains provisions for dealing with RSU’s or stock options or retirement assets, such as IRAs and 401(k) plans.

If you do not prepare a document relating to your durable power of attorney, someone will have to petition the court to be appointed as your agent. This petitioning process is time-consuming, expensive, and may be emotionally taxing for those involved, especially if there is conflict between your partner/preferred agent and a family member.

Advanced Health Care Directive

An advanced health care directive (AHCD) is similar to a power of attorney but is for health care decision making. In an ACHD, you appoint a person to be your agent in making health care decisions for you should you ever become incapacitated.

In an AHCD, you can designate the level of care that you would like in the event you become terminally ill and/or incapable of enjoying any quality of life. You can express whether you would like to be placed on life support if there is no chance of recovery. An AHCD may also contain information regarding your preferences for organ donation, personal care, and living arrangements.

Another necessary document for health care is a stand alone HIPAA Authorization Form. Because of HIPAA (Health Insurance Portability and Accountability Act), it is often difficult for loved ones to obtain information about your health and medical care. A HIPAA Authorization Form allows you to pre-designate the persons you want to give permission to speak with your doctor, other health care professionals, and insurance or Medicare providers.

Joint Tenancy

Owning assets in a joint tenancy may also ease the transition of transferring property to your partner. When a joint tenant dies, the other tenant automatically assumes ownership of the entire asset without probate. However, when the surviving joint tenant dies, the asset may be subject to probate if the surviving joint tenant dies intestate or passes their assets through only a will. Because the property is completely owned by the surviving joint tenant, the deceased joint tenant has no control of what happens with the property after the death of the surviving joint tenant.

Additionally, property owned in joint tenancy is subject to the creditors and liabilities of each joint tenant during life. This means that even if you helped buy a house with your partner and are 50% owner of the house, you may lose the house altogether if your partner is the losing party in the lawsuit or has outstanding debts.

Next Steps

To get a head start on your estate planning, contact an attorney that practices trusts and estate law. If you wish to have your intentions honored at death and leave your property to someone other than how the state deems is best, having an estate plan is not just a matter of convenience, it is a matter of necessity.