In 2006 a group of bipartisan congressmen
and congresswomen co-authored and passed legislation
designating the third week of October each year for a
campaign to raise awareness about the importance of
estate planning. This year, the sixth annual National
Estate Planning Awareness Week is this week.
It has been estimated that as many as 120
million Americans do not have an up-to-date estate plan.
The myth that only the wealthy need an estate plan
prevents some of us from putting our estate planning
house in order. Others may simply recoil from the
discomfort of confronting our own mortality. Legal fees
can be another hurdle, although the costs of not having
an estate plan often exceeds the legal fees to obtain a
basic set of estate planning documents.
What are some of the documents you should
have as part of your own comprehensive estate plan?
Last will and testament - A last will and testament
directs how assets titled in your individual name will
be distributed after your death. Without a will, assets
titled in your name will be distributed according to the
laws of the state where you live, sometimes leading to
unintended beneficiaries receiving some or all of your
estate. A will should also appoint an executor or
personal representative who oversees the administration
of your estate. If you have minor children, it is
important to include a provision appointing a guardian
to raise the minor(s) until the age of majority.
Revocable Trust - For some, a revocable trust is a
better alternative to a will because a trust allows
assets to pass to beneficiaries without the delay,
expense and public record of a probate proceeding. A
revocable trust is often called a “living trust” because
it helps to consolidate and manage assets during
lifetime, as opposed to a will which only takes effect
at death. An important consideration in trust planning
is identifying the right person to designate as
successor trustee. Naming one or more family members as
successor trustee(s) may be appropriate, or in some
cases naming a corporate successor trustee may be
Durable power of attorney - A durable power of attorney
for financial matters authorizes someone else to manage
your financial affairs in the event you become
incapacitated. A carefully drafted DPOA allows your
appointed agent to act on your behalf to file income tax
returns, file a claim for tax refunds and apply for
Social Security, Medicare and other benefits.
Advance health care directives - A Power of Attorney for
Health Care (POAHC) and a Declaration of Living Will are
two essential documents to have in place in the event
you become incapacitated. A POAHC allows your agent to
consult with your physician and other caregivers if you
are not able to communicate on your own behalf. A
Declaration of Living Will allows you to make important
end-of-life decisions, such as whether you wish to be
kept alive on a feeding tube if you fall into an
irreversible vegetative state.
Ancillary documents and considerations - You may also
want to prepare a written memorandum of who should
receive your personal property, such as jewelry and
collectibles. Another important document to have is a
form that complies with the Health Insurance Portability
and Accountability Act of 1996, which protects the
privacy of your medical records. It is also a good idea
to provide written funeral instructions that can be
easily found and followed by your loved ones. Lastly,
you may want to prepare a document describing how you
want your final remains to be handled.
In summary, everyone, not just the
wealthy, should have some form of an estate plan. The
sixth annual National Estate Planning Awareness Week may
be the perfect time to meet with an estate planning
attorney to prepare or update your own estate plan.
Richard A. Behrendt is the Director of
Estate Planning at Annex Wealth Management, with offices
in Elm Grove and Mequon.