Estate planning can mean a lot of different things. Clients may be a husband and wife from a blended family, setting up a trust for their children. They may be same-sex couples, who want to be confident that they’ll have no issues with hospital visitation. Clients may be twenty-something entrepreneurs, making long term tax choices and also providing security for their children in case of an emergency.
Below is a list of some of the most frequent documents I draft, along with some information about what each document does:
Will. The will only takes effect when you die. It affects where your assets go, who takes care of any children, and determines who is in charge of distributing your assets. Although it’s often said “everyone should have a will” because we all die eventually, you should definitely have a will if you have minor children, or a significant other who is not legally married to you, because the laws regarding how your estate will be handled will likely conflict with how you want your assets distributed.
Advance Healthcare Directive. Also called a “Durable Healthcare Power of Attorney” or a “Living Will.” The healthcare directive takes effect when you are incapacitated and someone else needs to make medical decisions on your behalf, including decisions about treatment and hospital visitation.
Durable Financial Power of Attorney. The financial power of attorney comes into play much like the healthcare directive does, if and when you are incapacitated. The financial power of attorney allows someone to take control of your finances. For many of us, the mortgage, car payment, childcare expenses, and so on could go unpaid if we were suddenly unable to take care of those matters.
Trusts. Trusts allow you to put money or assets under the control of an entity separate from yourself. They are typically used for tax avoidance, protecting the financial stature of your children, or protecting assets from creditors. They are usually considered alongside corporations and business entities (e.g. an LLC) because they can function similarly depending on the circumstances. Trusts are also frequently used to simplify the process via which your assets are passed on to your heirs when you pass on.
Do I need all these things?
Wills: If you have no assets, no children, no romantic partner, and have no concerns about the handling of your funeral, you can probably put getting a will on the back-burner, but this combination does not apply to most people. Getting a will is of great importance if you have minor children or a significant amount of assets.
Healthcare Directive: The State of Georgia recognized the importance of everyone having a healthcare directive, and thus created a template for all people to fill out. The healthcare directive is the most straightforward for non-lawyers to complete on their own, is freely downloadable, and is universal in its importance. Rowland Legal will always create one for you alongside the will. A lawyer is helpful in explaining the legal ramifications of the healthcare directive and the requirements for making it valid, but you should attempt to do it on your own if you cannot afford a lawyer.
Trusts: You probably don’t need a trust that takes effect while you are still alive, unless you are 55 or older, have 2+ million dollars in assets, or are terminally ill. Virtually all wills include a “testamentary trust” that kicks in if any heirs are minor children, and trusts are also a good way to manage retirement when at or nearing the age of 60. Trusts can be a financial boon to anyone in an assisted living community, and for people with disabilities. Otherwise, your assets generally should be well into the millions before trusts switch from being a burden to financially lucrative, but individual circumstances can vary greatly.
What about insurance?
Insurance policies are a pivotal part of how we protect our children, others, and ourselves in the event of an accident or illness. Unfortunately, insurance policies have become increasingly complicated, with an array of plans, possibilities, and tax treatments. Of great concern is the fact that people age 50 and older are frequent targets for the sale of extremely expensive–and entirely useless–insurance and annuity packages, and differentiating between a legitimate package and a scam can be difficult.
Although it may be out of your price range when considering small life insurance policies (e.g. 1 million dollar policies for minor children) it is strongly advised that you consult with any available attorney about more complex and expensive policies. Insurance agents are simply not neutral parties in the sale of their products, and a monthly bill over many years more than justifies what may be a quick phone call.
I’m afraid my children will be stuck with expenses or some of my debts.
Don’t be. Your personal debts are not passed on to your children, so if your debts are more than your assets, the only expense that may be worth planning for is a funeral. Vendors are happy to capitalize on fear. You should not be afraid, but rather, knowledgeable about exactly what is going to happen. We all die. You can plan for it. There is no reason to be afraid. You should be confident about how your affairs will be handled after your death.
Is hiring a lawyer for this expensive?
I have had a few lawyers ask me in shock, “how can you afford to write wills at that price!” Sometimes I reply, “how can you afford a $20,000 conference table!” The answer (to the first question) is that I manage overhead and I know how to scale my work. If you have fifteen million in assets and you’re staring at a near 50% estate tax, spending a few thousand to avoid a few million in estate tax is appropriate and reasonable. If instead your house is worth about the same as what you owe on the mortgage, your main priority is making sure your kids are taken care of with what you do have–which often does not include $5,000 for an estate lawyer. If no tax planning components are required, I can trounce the prices of my competitors, at a cost which will pay for itself when your heirs are taking care of your estate, as well as ease a tremendous emotional burden. If you have a large net worth and want to make sure as much of it as possible goes where you want it to go–we can spend a month working on that together too.
This sounds cheap. Are you a good lawyer? Good lawyers are not cheap.
And yet, they can be! The world has many examples of excellent lawyers charging $50 an hour and terrible lawyers charging $350. Just like a car mechanic, a hair stylist, a surgeon, finding someone capable depends on many factors, and you should not be dissuaded by low costs. Evaluate lawyers by the quality of their work. Interview them to gauge their abilities and your rapport.
Are there ever any discounts?
Discounts are sometimes offered on an as-available basis to police officers, EMTs, military members preparing for deployment,and others.
What if I do it on my own?
Just like doing your own plumbing, fixing your own car, painting your own walls–this is something you could do on your own, with the assistance of materials regarding the subject. Unfortunately, the nature of these documents is that if you do not get the documents right the first time, you will not be in a position to fix any problems while disabled in a hospital. Though you have the opportunity to fix mistakes when taking the do-it-yourself route with almost everything else, you only get one shot at a will, and it needs to work precisely as intended. Even with years of legal training, it can take many hours of thought to draft something that accomplishes what might sometimes appear to be a simple estate planning goal. It’s very rare that we advise people to do it on their own unless they have no children and plan for their assets to be distributed the same way that intestate succession would have provided.