The simplest estate planning documents include: a will, financial power of attorney, healthcare power of attorney and an advanced directive.
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EDITOR'S NOTE: This article is adapted from the 2021 edition of Northern Nevada Smart Money, a specialty magazine of the Northern Nevada Business Weekly, the 4th edition of which inserted for subscribers in the Wednesday, March 24, 2021, edition. You may also view the digital edition here.
Living through the COVID-19 pandemic has added stress and anxiety to all of our lives. Many of us have lost loved ones and are now dealing with the reality of a lack of proper planning on the loved ones’ part, due to their lack of an estate plan. Now is the time to provide certainty in an uncertain time by implementing a solid estate plan. An estate plan allows you to nominate people that you trust to assist with your estate, both during your life and after you pass away. The term “estate plan” covers many things as follows.
Daniel S. Judd
The simplest estate planning documents include: a will, financial power of attorney, healthcare power of attorney and an advanced directive. The powers of attorney allow friends or family members to make financial and healthcare decisions on behalf of the person who created the documents, should they become incapacitated. The purpose of these documents is to avoid the need for a guardianship. The advanced directive allows the person executing the documents to make certain end of life decisions, and the will directs how your property is to be distributed upon your death. The next level of estate planning is to create a living trust. Typical estate plans consist of the previously mentioned items, as well as creating a living trust to hold all of your assets, along with other supporting documents. This level of estate planning is appropriate for most people. The person or people creating the trust are referred to as the grantors of the trust. They will also be the trustees and beneficiaries of the trust during their lifetimes. You will have the power to use trust funds for your benefit during your lifetime. You will also continue to be able to use your assets normally; however, the assets will be held in the name of the trust. The trust document, much like the will, directs how your property will be distributed upon your death. Additionally, if you are a parent, the trust document directs who will be your children’s guardians after your death. It is very important to note that if a trust has been properly drafted and funded, trust assets are not required to be probated. Trust property is distributed through a trust administration, which is significantly faster and less expensive than a probate proceeding. By having a properly drafted estate plan including a trust, a person can save their family significant time, money and frustration during an already difficult time. One of the largest advantages of creating an estate plan where property is held in trust is that probate will generally be able to be avoided. Probate is a fancy legal term that will require your family to spend a lot of your money on attorneys to go through court proceedings before they are able to receive your property. If an estate is worth more than $100,000 but less than $300,000, the estate can be probated through a summary administration proceeding. If the estate is worth an excess of $300,000, the estate will require a full probate. As the value of the estate increases, so does the duration and cost of the probate proceeding. If an estate plan with a trust is set up prior to a person’s death, the probate process can be avoided, saving their loved ones a great deal of time and money. Although having your assets in a trust may sound intimidating, the reality is that a trust is just a will that allows your property to pass to your family without going through the burdensome probate process. It is very important to remember that estate planning can easily be done with the help of a professional. Be sure to set up a consultation with a professional to discuss what estate planning options will best suit your individual needs. Daniel S. Judd is an Associate Attorney with Allison MacKenzie, Ltd., in Carson City. Go to allisonmackenzie.com to learn more.
Daniel S. Judd