Estate planning now can help avoid headaches later

A topic that many elderly people, and quite frankly, people in general, have a hard time talking about is estate planning. Very few people want to think about what life will be like for loved ones, once they are gone. Although the conversation is a difficult one, it is a very important one. Even if the conversations are tough, most people do not want to leave a mess for their friends or family members.

Luckily, with a little bit of work today, you can save your loved ones a lot of stress after you are gone. Your loved ones will be going through a very emotional time, adjusting to life without you.

One of the first aspects many estate planning attorneys discuss is completing Power of Attorney documents. Power of Attorney documents are put in place in the event that you are incapacitated for any reason.

Per Oxford Languages, a Power of Attorney is defined as “the authority to act for another person in specified or all legal or financial matters.”

There are two types of Powers of Attorney, “Power of Attorney for Healthcare” and “Power of Attorney for Finances.”

Before completing these, it is important to take into consideration who you would like to act on your behalf if you are unable to do so. These decisions should not be taken lightly. You should have conversations with those who you would like to designate as your agent for your Power of Attorney documents. It is important to discuss not only your wishes, but also to ensure that they are comfortable acting on your behalf should they need to. This is a conversation that is critical but often times skipped or forgotten.

You may have a family member that is in healthcare that you would feel comfortable making your health care decisions. You may have another family member that you trust most with your finances. You can name different agents for health care and for finances. This is something that is often times overlooked.

A big question that gets asked about is how do I pass along what I own to my beneficaries. Many people would like to do this without their estate going through probate. Having the correct titling on what you own is a key step to not only ensuring that you are able to pass along what you own to beneficiaries, but also passing it on without your loved ones having to go through the probate process.

One step you can take is adding what is called, “Payable on Death” titling on your bank accounts. Payable on Death titling allows the money left in your bank accounts to be paid to your beneficaries. Attorney Miranda Lamb, of Nolan and Deffner Legacy Law, in Wausau says, “Payable on Death titling is a beneficiary designation most commonly used for bank accounts, such as checking and savings accounts. It is important because it will avoid probate.”

Transfer on Death titling is a beneficiary designation most commonly used for real estate assets or brokerage account assets. It is also important because it does avoid those items going through probate.

People that have Retirement Accounts and Life Insurance policies can also pass along these assets through listing beneficiaries. Lamb says, “It is very important to list beneficiaries on retirement accounts and life insurance policies if you want to avoid probate. It will also ensure that all intended beneficiaries receive an equal share of the account or policy. Therefore, it is recommended that all persons that an individual wants to name as a beneficiary are actually named, versus naming just one beneficiary and expecting that one person to distribute said account or life insurance policy to all beneficiaries that may be intended.”

With all of these items, it is very important to review at least once a year (or after a major life event) to make sure that the beneficiaries listed are who you want them to be.

It is important to note, that the titling/beneficiaries take precedence over a Will. Lamb states, “just because you have

Titling to Consider a Will does not mean that the terms of that Will will govern your estate administration.” Therefore, improper titling could result in unintended consequences. For example, if you have a will that lists ten different beneficiaries, but your beneficiary designations (POD, TOD, or beneficiary designations on retirement accounts and life insurance) only list one person, or two, the benefi ciaries that are not named on the actual policy designation are out of luck.

Another topic discussed often is creating a trust. “Generally speaking, people will create a revocable trust to reduce the opportunity for confl ict at the death. It appoints one person in charge to make decisions on behalf of the estate (to sell the real estate, for a certain price), or to pay certain bills without having to have unanimous consent of all beneficiaries. They are also helpful when there are a lot of different categories of “players”- i.e., children, grandchildren, charitable intentions, disproportionate gifting, etc.” Lamb recently stated.

There are many different types of trusts that are available for people. Attorney Lamb states, “There are a number of different trust options that all accomplish different estate planning goals.”

Two of the more popular types of trusts are revocable and irrevocable trusts.

Let’s first talk about revocable trusts. A revocable trust, also known as a living trust, is a legal arrangement created during the grantor’s (also known as the creator of the trust), lifetime. One of the biggest advantages to a revocable trust is flexibility. The grantor has full control over the trust assets. The grantor can modify the trust terms or beneficiaries as their circumstances or wishes change. Assets held in a revocable trust bypass the probate process, allowing for a quicker and more efficient distribution of assets to the benefi ciaries. Because revocable trusts are not subject to the probate process, the details of the trust and the assets it contains remain private. One of the disadvantages to a revocable trust is that the assets inside the trust are not protected from creditors (i.e. nursing home costs).

An irrevocable trust does not offer nearly as much flexibility. When an irrevocable trust is set up, the grantor, or creator, is giving up ownership of the assets within the trust.

On the flip side, an advantage of an irrevocable trust is that the assets inside the trust are protected from creditors (i.e. nursing home costs).

As you can see there are a lot of variables when it comes to estate planning. There is not an easy answer or a one size fits all approach to solve everyone’s issues. Lamb says, “each client is unique, and what may work best for one client is completely different than what may work best for another.” It is important to consult a professional to make sure you are making the right decisions .