This week, we start off addressing the need of the every-day person to set up an estate plan. It’s likely that many readers shy away at this idea, especially when reading that amorphous word-“estate.” And, it’s also as likely that many of us think that an estate plan is reserved for those who own multiple homes, a boat, numerous fancy vehicles, and loads of cash and jewelry stored away in some safe deposit box. But, that’s not the case.
Ask yourself, do you own a home (or pay a mortgage, which is likely the more accurate question)? If so, you have an estate. Do you own a car? If so, then this too is part of your estate. How about jewelry? A guitar? Tools? Something you can fit in a box? I’m sure you see where this is going. Any real property (which is a fancy way of saying your home or land) and any personal property (which is all your other property) is part of your estate.
So, why an estate plan? Let’s be real. Most of us know what a will is, which was addressed in Part I (Wills-And-Trusts-101—Part-1-Of-2) of this series of articles. And, whether you read the article or not, it is likely that we are familiar with the purpose of a will, which is to make sure our property goes to the specific people we name in our will. Well, that property you list in your will is your estate. It’s that simple.
But, sometimes, writing a will is not enough of an estate plan. Don’t worry if that’s all you’ve set up. If so, you are probably in a better position than most people, who delay setting up any type of plan. But, there is a more complete estate plan for the every-day person, which has four parts: (1) a revocable trust; (2) a durable power of attorney; (3) a healthcare directive; and (4) a pour-over will. This may seem like a lot to swallow, but delaying such an estate plan flies in the face of the adage: an ounce of prevention is worth a pound of cure.
So, why this comprehensive four-part estate plan? To keep this very simple, and to not stray from this article being a primer, such an estate plan functions at a person’s death as well as during a persons’ life. A will, however, functions only at a person’s death.
The following may help: A will’s function is to make sure property of a deceased person goes to the person identified in the will. Such as when a person leaves his ’69 Camaro to his nephew. But what if the nephew is 11 years old? Is he really ready for the ’69 Camaro? This is where the revocable trust steps in. You can make sure that the ’69 Camaro is taken care of until your nephew turns 21, when he can handle such a car. In your revocable trust, you appoint a trustee (someone you trust, makes sense, right?) to watch over the car when you die and then give it to your nephew when he turns 21, or any other age you choose. However, a simple will, without a trust or without a trust built in, cannot carry out such a plan.
As for the durable power of attorney, as well as the healthcare directive, these two parts of the four-part estate plan provide the assurance that if you become incapacitated before your death, someone you have chosen, while you were alive and lucid, will take care of your finances, property, and make health care decisions that you wish to be carried out. Again, you choose someone whom you trust.
Although a more detailed explanation will be reserved for a future article, please know that the above information was kept in simplest form to serve as a primer to let you know that you likely have an estate. And, like many of us, planning for such things in the future, which will likely benefit others in our life, helps us sleep better at night. As many areas of law, the complexity is understood and handled well by an attorney. Thus, it’s helpful to know that an experienced estate planning attorney is a phone call, or email, away to help provide the necessary guidance.