Everyone Needs an Estate Plan
Estate planning isn’t only for the wealthy – if you own assets like a house or retirement account, or if you have minor children and want to provide for a guardian for them in the event of your death, you need to set up an estate plan that outlines your wishes clearly. While most people don’t really want to think about planning for death or incapacity, failing to create your estate plan can have consequences that may be devastating to your loved ones, and since we don’t know when we’ll die or become incapacitated, it’s never too early to start your plan.
PREPARING YOUR ESTATE PLAN
Preparing an estate plan is simply deciding on and legally documenting a clear set of instructions about:
DOCUMENTS INCLUDED IN A SIMPLE ESTATE PLAN
Will (Last Will and Testament):
Your Will designates who should get your money and possessions, as well as who would become a guardian of your minor children if both parents die. You can also plan for the care of any pets that survive you and you can designate that trusts be set up for the care of your children or grandchildren through your Will if you desire.
Healthcare Power of Attorney:
Also known as a health care directive, a Healthcare Power of Attorney allows one or more people you select to make health care decisions on your behalf if you are unable to make those decisions for yourself.
General Durable (Financial) Power of Attorney:
A Financial Power of Attorney allows one or more people you select to take care of your financial affairs on your behalf if you become incapacitated and unable to handle those matters for yourself, which can include paying your bills, dealing with your accounts and policies, filing financial documents, managing your business interests, and many other matters.
Living Will:
Through your Living Will you express your wishes with respect to life support and other life-sustaining measures in the event doctors believe your death is imminent or you’re unlikely to recover from a persistent coma or vegetative state.
Living Trust (Optional):
Without a Living Trust (Revocable Trust) all of your assets that transfer through your will must go through probate, which is a public court process that gathers and distributes your assets, and the process can potentially be expensive and lengthy, especially if there are any challenges to your will. A trust, on the other hand, remains private and no court costs are involved with respect to the administration of the trust itself. Any assets you’ve transferred into your trust are passed to your beneficiaries by your trustee(s). Under Arizona law, your beneficiaries only have the right to see the portion of the trust that pertains to them, and any persons who are not named in the trust as a beneficiary (including other family members) have no legal right to see the trust.
COMMUNICATE YOUR WISHES
In addition to preparing and signing the documents listed above, it’s important that you communicate your wishes with your family members, particularly any person you’ve selected as the personal representative (executor) of your estate, trustee of your trust, or agent under your healthcare and financial powers of attorney.
When you decide on a personal representative, trustee or agent, let them know and confirm they’re willing to fulfill that role. When we prepare your estate plan, we provide you with simple guidelines that you can give to these individuals to help them understand their role and duties.
REVIEW YOUR BENEFICIARY DESIGNATIONS
If you have life insurance, investment accounts and retirement plans such as a 401(k), make sure the persons you have listed as beneficiaries with respect to those accounts are the people you still want to receive those funds. Even if your will says otherwise, the beneficiaries listed on the account will inherit the money. Your beneficiary decisions are likely to change as your life evolves. You may have marriages and divorces, births and deaths, and you need to change beneficiary designations when these life events occur.
PLAN FOR BUSINESS SUCCESSION IF YOU’RE A BUSINESS OWNER
If you're an entrepreneur, your estate plan needs to include a plan for transitioning out of your business. Business succession planning involves making a series of decisions about who will take over your business upon your retirement, death or disability, and developing a strategy for that succession. Although succession plans are commonly associated with retirement, they are important to have in place at any point during the lifespan of your business. Planning ahead for when the unexpected happens to you or a co-owner can help reduce headaches, disputes and monetary loss as your business grapples with such a transition.
PREPARING YOUR ESTATE PLAN
Preparing an estate plan is simply deciding on and legally documenting a clear set of instructions about:
- who your property and assets will go to when you die,
- how and by whom your property and assets will be managed if you become incapacitated,
- who will make healthcare decisions on your behalf if you’re unable to make them for yourself,
- who will take care of your minor children or pets when you die or become incapacitated, and
- what your wishes are with respect to life-support and other measures at the end of your life.
DOCUMENTS INCLUDED IN A SIMPLE ESTATE PLAN
Will (Last Will and Testament):
Your Will designates who should get your money and possessions, as well as who would become a guardian of your minor children if both parents die. You can also plan for the care of any pets that survive you and you can designate that trusts be set up for the care of your children or grandchildren through your Will if you desire.
Healthcare Power of Attorney:
Also known as a health care directive, a Healthcare Power of Attorney allows one or more people you select to make health care decisions on your behalf if you are unable to make those decisions for yourself.
General Durable (Financial) Power of Attorney:
A Financial Power of Attorney allows one or more people you select to take care of your financial affairs on your behalf if you become incapacitated and unable to handle those matters for yourself, which can include paying your bills, dealing with your accounts and policies, filing financial documents, managing your business interests, and many other matters.
Living Will:
Through your Living Will you express your wishes with respect to life support and other life-sustaining measures in the event doctors believe your death is imminent or you’re unlikely to recover from a persistent coma or vegetative state.
Living Trust (Optional):
Without a Living Trust (Revocable Trust) all of your assets that transfer through your will must go through probate, which is a public court process that gathers and distributes your assets, and the process can potentially be expensive and lengthy, especially if there are any challenges to your will. A trust, on the other hand, remains private and no court costs are involved with respect to the administration of the trust itself. Any assets you’ve transferred into your trust are passed to your beneficiaries by your trustee(s). Under Arizona law, your beneficiaries only have the right to see the portion of the trust that pertains to them, and any persons who are not named in the trust as a beneficiary (including other family members) have no legal right to see the trust.
COMMUNICATE YOUR WISHES
In addition to preparing and signing the documents listed above, it’s important that you communicate your wishes with your family members, particularly any person you’ve selected as the personal representative (executor) of your estate, trustee of your trust, or agent under your healthcare and financial powers of attorney.
When you decide on a personal representative, trustee or agent, let them know and confirm they’re willing to fulfill that role. When we prepare your estate plan, we provide you with simple guidelines that you can give to these individuals to help them understand their role and duties.
REVIEW YOUR BENEFICIARY DESIGNATIONS
If you have life insurance, investment accounts and retirement plans such as a 401(k), make sure the persons you have listed as beneficiaries with respect to those accounts are the people you still want to receive those funds. Even if your will says otherwise, the beneficiaries listed on the account will inherit the money. Your beneficiary decisions are likely to change as your life evolves. You may have marriages and divorces, births and deaths, and you need to change beneficiary designations when these life events occur.
PLAN FOR BUSINESS SUCCESSION IF YOU’RE A BUSINESS OWNER
If you're an entrepreneur, your estate plan needs to include a plan for transitioning out of your business. Business succession planning involves making a series of decisions about who will take over your business upon your retirement, death or disability, and developing a strategy for that succession. Although succession plans are commonly associated with retirement, they are important to have in place at any point during the lifespan of your business. Planning ahead for when the unexpected happens to you or a co-owner can help reduce headaches, disputes and monetary loss as your business grapples with such a transition.