One night while out on the town with some friends, a friend of a friend asked me what estate planning was. I thought about the question for a moment, quickly raced through what my answer should be, and realized that there are many different ways to answer that question. Since the goals to be accomplished by estate planning can be varied, how you might define estate planning can differ.
My answer was three fold. First, estate planning arranges for the orderly transfer of assets to your heirs after your lifetime. Second, estate planning allows you to protect your heirs from the potentially detrimental effects that an inheritance can have. Third, estate planning can be utilized to protect assets from creditors and illness.
The estate planning task can also vary based on the stage of life you find yourself at. If you are at a younger stage of your life, estate planning can address issues such as guardianship for your young children, and management of your children’s finances if something were to happen to the natural parents. If you are at a later stage of life, estate planning can address transmission of retirement assets and protection of assets from medical expenses and, if the estate is large enough, from estate taxes. While we also might focus on the transmission of assets to the next generation, we also have to be concerned with the management of assets in the current generation in the case of disability or mental incapacity.
The typical estate plan is made up of several basic documents. They are the Last Will and Testament, the Durable Power of Attorney for Property, the Durable Power of Attorney for Health Care, a Living Will, and possibly a testamentary or inter vivos trust. We also must not forget that beneficiary designation forms play a large role in the estate plan, and oftentimes these important documents receive scant attention. The documents to be used in a particular estate plan depends on the individual situation.
I am often asked how much estate planning costs. My standard reply is that is a lot like walking into a car repair shop and asking how much to fix a car. The answer is it depends on what you need. You can expect a truly bare bones simple estate plan to run several hundred dollars, whereas an estate plan using one or more trusts can be several thousand dollars. Bottom line is it depends. It can seem like a significant investment, but some attorneys will give you a free consultation to discuss your situation.
Okay, so here comes the lawyer stuff, I need to add a disclaimer here: unfortunately, it is impossible to offer comprehensive legal advice over the internet, no matter how well researched or written. And remember, reviewing this website and my blogs does not make you a client of my Firm: before relying on any information given on this site, please contact a legal professional to discuss your particular situation.