Estate Planning

Estate-PlanningBuilding a life is a day-by-day process. Similarly, estate planning is not a one-time transaction; it is a life-long process that should adapt as the law and clients’ needs both change. A good estate planning lawyer is both a technician who constantly keeps up with best practices and changes, but also a trusted advisor who is attentive to the particular needs of each client.

It’s never too early to start planning for your future.

What is estate planning?

When someone passes away, his or her property must somehow pass to another person. In Georgia, any competent adult has the right to choose the manner in which his or her assets are distributed after his or her passing. (The main exception to this general rule involves what is called a spousal right of election which disallows the complete disinheritance of a spouse.) A proper estate plan also involves strategies to minimize potential estate taxes and settlement costs as well as to coordinate what would happen with your home, your investments, your business, your life insurance, your employee benefits (such as a 401K plan), and other property in the event of death or disability. On the personal side, a good estate plan should include directions to carry out your wishes regarding health care matters, so that if you ever are unable to give the directions yourself, someone you know and trust would do that for you, and know when you would want them to authorize extraordinary measures and when you would prefer they pull the plug.

Why is it important to establish an estate plan?

Sadly, many people of all backgrounds don’t do proper estate planning because they don’t believe that they have a lot of assets. Many couples assume that if they have children, their children can just come in and divide their assets by themselves. If you don’t make proper legal arrangements for the management of your assets and affairs after your passing, the state’s intestacy laws will take over upon your death or incapacity. This often results in a distribution of your assets that you never would have wanted.

If you pass away without establishing an estate plan, your estate would undergo probate, a public, court-supervised proceeding. Probate can be expensive and tie up the assets of the deceased for a prolonged period before beneficiaries can receive them. Even worse, your failure to outline your intentions through proper estate planning can tear apart your family as each person maneuvers to be appointed with the authority to manage your affairs. It is not unusual for bitter family feuds to ensue over modest sums of money or a family heirloom.

In blended families, in which one or both spouses enter a marriage with children from prior relationships, there are a whole host of potential conflicts that can be addressed with smart planning, including the potential for conflict between the interests of current spouse and those of prior children. Without a Will in place, for example, Georgia law would award 2/3 of the value of a decedent’s estate to the decedent’s children from a prior marriage- even if those children are fully grown adults making a sufficient living and even if the current spouse truly needed more assets from the estate to meet their needs. With good planning, unwanted or unanticipated outcomes like this can very often be prevented.

For same-sex couples in states like Georgia whose laws do not recognize domestic partnerships, good estate planning and incapacity planning are the only ways for you and your partner to ensure that your wishes on everything from the handling of your estate to medical and financial decision-making are codified in a way that will be upheld. Georgia law considers same-sex couples to be strangers to each other, so absent smart estate planning, state law will allow your family members to make decisions you’d often want your committed partner to make. For same-sex couples with children, the need for good estate planning is even greater, often beginning with adoption of children by both partners to preserve legal rights to raise or even have contact with a child after the death or incapacity of one partner.

What does my estate include?

Let’s start with an oversimplification.  Your estate is simply everything that you own, anywhere in the world, including:

-Your home or any other real estate that you own

-Any interests you may have in any business

-Your share of any joint accounts

-The full value of your retirement accounts

-Any life insurance policies that you own

-Any property owned by a trust, over which you have a significant control

Obviously not all of the items listed above are part of your estate for probate purposes.  We discuss these distinctions in detail with each of our estate planning clients to ensure that they understand exactly how their plan works.  Our goal is generally to have as few assets as possible pass through the probate process, because probating an estate is often an expensive and time-consuming process.

I have minor children (under age 18).  How do I name a guardian for my children?

If you have children under the age of eighteen, you should designate a person or persons to be appointed guardian(s) over their person and property. Of course, if a surviving parent lives with the minor children (and has custody over them) he or she automatically continues to remain their sole guardian. This is true despite the fact that others may be named as the guardian in your estate planning documents. You should name at least one alternate guardian in case the primary guardian cannot serve or is not appointed by the court.

What estate planning documents should I have?

A comprehensive estate plan should include the following documents, prepared by an attorney based on in-depth counseling which takes into account your particular family and financial situation:

A Living Trust can be used to hold legal title to and provide a mechanism to manage your property. You (and your spouse or partner) are the Trustee(s) and beneficiaries of your trust during your lifetime. You also designate successor Trustees to carry out your instructions as you have provided in case of death or incapacity. Unlike a Will, a Trust usually becomes effective immediately after incapacity or death. Your Living Trust is revocable, which allows you to make changes and even to terminate it. One of the great benefits of a properly funded Living Trust is the fact that it will avoid or minimize the expense, delays and publicity associated with probate. Read the FAQ section on Probate & Living Trusts for more information.

If you have a Living Trust-based estate plan, you also need a Pour-Over Will. For those with minor children, the nomination of a guardian must be set forth in a Will. The other major function of a Pour-Over Will is that it allows the executor to transfer any assets owned by the decedent into the decedent’s trust so that they are distributed according to its terms.

A Will, also referred to as a Last Will and Testament, is primarily designed to transfer your assets according to your wishes. A Will also typically names someone you select to be your Executor, who is the person you designate to carry out your instructions. If you have minor children, you should also name a Guardian as well as alternate Guardians in case your first choice is unable or unwilling to serve. A Will only becomes effective upon your death, and after it is admitted by a probate court.

A Durable Financial Power of Attorney allows you to carry on your financial affairs in the event that you become disabled. Unless you have a properly drafted power of attorney, it may be necessary to apply to a court to have a guardian or conservator appointed to make decisions for you when you are disabled. This guardianship process is time-consuming, emotionally draining, and can costs thousands of dollars.

There are generally two types of durable powers of attorney: a “present” durable power of attorney in which the power is immediately transferred to your attorney in fact; and a “springing” or future durable power of attorney that only comes into effect upon your subsequent disability as determined by your doctor.   When you appoint another individual to make financial decisions on your behalf, that individual is called an “attorney in fact”, or more often,your “Agent”. Anyone can be designated, most commonly your spouse or domestic partner, a trusted family member, or friend. Appointing a power of attorney assures that your wishes are carried out exactly as you want them, allows you to decide who will make decisions for you, and is effective immediately upon subsequent disability.

The law allows you to appoint someone you trust – for example, a family member or close friend to decide about medical treatment options if you lose the ability to decide for yourself. You can do this by using an Advance Directive for Health Care (previously called a Durable Power of Attorney for Health Care) where you designate the person or persons to make such decisions on your behalf. You can allow your health care agent to decide about all health care or only about certain treatments. You may also give your agent instructions that he or she has to follow. Your agent can then ensure that health care professionals follow your wishes. Hospitals, doctors and other health care providers must follow your agent’s decisions as if they were your own. In conjunction with other estate planning tools, an Advance Directive can bring peace of mind and security while avoiding unnecessary expense and delay in the event of future incapacity.

Some medical providers have refused to release information, even to spouses and adult children authorized by durable medical powers of attorney, on the grounds that the 1996 Health Insurance Portability and Accountability Act, or HIPAA, prohibits such releases. In addition to the above documents, you should also sign a HIPAA Authorization Form that allows the release of medical information to your Agents, your Successor Trustees, your family, and other people whom you designate.