At some point during adulthood, it is important to manage your estate planning.  Many people consider estate planning to be something that is done in old age, but it is something every adult should think about.  You never know what is going to happen and you don’t want to leave your estate unaccounted for and force your family to go through a legal mess to manage your estate.

Estate planning involves much more than just drawing up a will, there is a lot to take into consideration, including planning for end-of-life care and how to best protect your investments against excessive taxation.  Choosing an attorney with experience in estate planning can help you preserve everything you’ve worked hard for.

Whether you are worth $10,000 or $1,000,000, it is important to manage your estate planning.

What is Estate Planning?

Estate planning is the process of planning for the transfer of property at the time of your death as well as other personal matters including powers of attorney, tax planning, and more.  It is beneficial to manage your estate planning with a counsel of professional advisors who understand your goals, the nature of your assets, and family structure.  Your counsel should include an attorney that has experience with estate planning as well as an accountant, financial planner, and life insurance advisor.

Last Will and Testament

Last Will and TestamentThe will is the document most people think of when they think of estate planning.  The will includes the terms of how your possessions and finances will be disbursed among your loved ones after you die.  It is important to create a will because if you die with no will, the state will determine how your assets will be distributed and they will be subject to a large inheritance tax.  Strategic planning of your will is especially important for married couples to ensure that the surviving spouse receives their inheritance and that when the second spouse dies, their surviving children or heirs then receive the inheritance without an inheritance tax.

An important thing to keep in mind is that your will only dictates what happens to possessions and assets that are part of your probate estate.  It does not cover property that is controlled by beneficiary designations or by titling including property titled with joint names, payable on death accounts, life insurance, retirement plans, and employee death benefits. These assets are already set to be passed on automatically upon your death and are therefore not part of your will.  You can make them part of your will if the beneficiary designations make them payable to your estate.

What Happens if You Die Without a Will?

If you die without a will, the distribution of your possessions and assets will be determined by the laws of descent of your state.  State laws typically distribute inheritances to your spouse and children first, and to other family members if you have no surviving spouse or children.  These laws vary from state to state but typically adhere to how the state legislature assumes most people would disburse the assets while protecting certain beneficiaries like minor children.  What the state decides to do with your possessions or assets may or may not reflect how you would like them distributed.

Creating a will allows you to choose how your possessions and assets are distributed instead of leaving this up to the default plan of the state.  You can also address other personal matters that may not be easily addressed by the laws of the state.

What Does a Will Do?

A will allows you to choose how to disburse certain property that you own at the time of your death in the manner of your choice.  However, your will may be subject to forced heirship laws in your state that may prevent you from disinheriting a spouse or children.  Your will may also not cover assets with beneficiary designations such as life insurance, retirement plans, employee death benefits, and other assets payable on death unless they are payable to your estate by the terms of their beneficiary designations.  This is why when making a will, you need to also review beneficiary designations for these types of assets.

The complexity of wills may vary depending on what you hope to achieve.  If your will only covers the distribution of your assets, this is called a simple will. Testamentary trust wills are wills that create one or more trusts upon your death.  A pour over will is a will that leaves some probate assets to a preexisting inter vivos trust created during your lifetime, which helps ensure protection from creditors, protection of an heir from their own irresponsibility, divorce protection, provisions for charities, and minimization of taxes.

Your will can also be used to accomplish the following:

  • You can designate a guardian for your minor children which will also help minimize the court’s involvement in their care.
  • You can designate the executor of your will and estate which can keep the courts out of the matters of your estate.
  • You can provide for friends, stepchildren, godchildren, charities, and other parties that would not benefit through state laws of descent.
  • If you are the custodian of assets of a child or grandchild under the UGMA or UTMA, you can name a successor custodian and keep the courts out of it.

What doesn’t a will do?

A will does not cover the transfer of non-probate assets, which are assets that by law will pass to another individual upon your death and are not part of your estate.  This includes assets that by title of beneficiary designation are set to automatically pass to someone else, like real estate.  Insurance policies and IRAs are also non-probate assets and will automatically pass to the named beneficiary.

Durable Power of Attorney for HealthcareLast-Will-and-Testament-Form-with-Gavel

Couples generally assume they will be making healthcare decisions for one another and be privy to details protected by HIPAA.  However, with a power of attorney document, each member of the couple, or anyone you choose to designate, will have the authority to act on your behalf with healthcare decisions.  Many of these documents have a special set of directions, and they grant access to the individual’s medical records, which may be necessary if the individual is unable to make decisions for their course of treatment.

Without establishing a durable power of attorney for healthcare, medical professionals are under no obligation to follow anyone’s wishes about medical treatment except that of the patient themselves.  If you have strong beliefs for or against certain procedures, having this in place will help support your wishes, even if you are unable to advocate for yourself.

What is a health care proxy?

A health care proxy is another term for a durable medical power of attorney.  The person who you name to be your durable power of attorney has the authority to make medical decisions for you in situations in which you cannot express your own preferences for medical treatment.  Medical powers of attorney typically need to make decisions when someone is unconscious or in a mental state in which they do not have the legal capacity to make their own decisions. 

While typically only one person assumes the role of health care proxy, you can designate multiple people as health care proxies in case the primary person is not available.  Before choosing someone to be your medical power of attorney, make sure you confirm with them that they are prepared to carry out your wishes when faced with the situation.

Why is naming a durable medical power of attorney important?

Naming a durable medical power of attorney and documenting your wishes for medical care leaves a record for medical professionals and your family to refer to so that you will get the treatment you desire.  These health directives are recorded in a written legal document that takes all the guesswork out of the choices for your medical care if you are not able to communicate your wishes.  This allows medical professionals to immediately provide the treatment you want and saves your family from having to make difficult decisions regarding your health.

Living Will


A living will is slightly different from a durable medical power of attorney.  This document covers treatments you do or do not want should you suffer a terminal illness or end up in a permanent vegetative state, including feeding tubes and life-support treatments.  Living wills are only enacted when you are incapacitated, while power of attorney for medical decisions can be enacted before you become incapacitated.

Generally, living wills concern your desire for “life-sustaining treatment” including feeding tubes, ventilators, heart-lung machines, and any other form of treatment that will extend your life but not improve your condition.  You must carefully consider the religious and philosophical implications when it comes to decisions on life-sustaining treatments and only sign a living will that includes terms that are consistent with your beliefs.  Your living will applies in situations in which life-sustaining treatments may prolong your life for a period of time, but not administering these treatments would result in your death.

What is the difference between a medical power of attorney and a living will?

The medical power of attorney is considered a proxy to help you make medical decisions about your health care.  This can apply to any area of medical care, including end-of-life treatment.  The medical power of attorney can act on your behalf if you are unable to do so due to the loss of consciousness or mental ability.  A medical professional can help determine if you can make your own medical decisions before the power of attorney takes over.

A living will is only applied for terminal illnesses or injuries that require life-sustaining treatments such as assisted breathing and feeding tubes to keep you alive.  It is very important to clearly communicate your wishes in your living will so that the person in charge of carrying out the will can ensure that you get the treatment you desire.

Durable Power of Attorney for Finances and Property

In addition to choosing a power of attorney designee for healthcare, you will also need to choose a power of attorney for decisions regarding your finances and property.  The person you choose for this power of attorney can be different than who you choose for your medical power of attorney.  The power of attorney for your finances and property will have access to your bank accounts and financial records, pay your mortgage and other bills, manage your investments, and pay back or take out loans on your behalf. 

Without declaring a power of attorney for your finances and property, many banks, utility providers, and landlords will not allow anyone who isn’t named on the account to access it for information or funds.  Even married couples may be stonewalled if they are not the spouse on the account.  Whether single or married, it is important to designate someone you trust to handle your affairs if you are incapacitated.

When planning for your power of attorney, you can choose what activities the named power of attorney can act upon on your behalf and you can set the criteria for when the power of attorney goes into effect, such as if you experience a mental or physical ability that prevents you from acting on your own behalf.  You can also choose to grant temporary or permanent authority to act as your power of attorney.

The person you choose to act on your behalf is referred to as your “agent” and they can take any action that you have permitted them to take in the power of attorney document.  It is important to be clear about acts your agent is permitted to take on your behalf as they will have to show proof of their power of attorney to sign documents on your behalf to sell your property or open and close your bank accounts.

Who should be my power of attorney?

Many people choose family members, such as their spouse or children to be their agent.  You can name successor agents in case your primary agent is unavailable or unable to act when the situation arises, and you can name multiple co-agents.  You can also specify how you want your agents to act, whether you name multiple successors in order of importance or co-agents who will work together to act on your behalf.

The only qualifications for who you name as your agent are that they cannot be a minor or someone who is incapacitated.  It is most important to choose agents you know you can trust.

What powers should my agent have?

You can give your agent the power to manage your day-to-day financial affairs, implement your estate plan, and transfer assets to the trusts you have created.  You can also express guidelines in the document that allow your agent to give gifts on your behalf to family members and charities.  If choosing this option, work with an attorney to draft this plan in a way that protects your agent from unintended estate tax consequences.

Does my power of attorney expire?

In the past, people had to renew their power of attorney every so often under state laws. Now most states accept durable power of attorney which allows your power of attorney document to remain valid until your death or you revoke the document.

It is still a good idea to meet with your attorney periodically to review your power of attorney and make any necessary changes to the document.  You should also consider whether the agents you name in your document are still the best people to be your powers of attorney.

Plan for the Future – Today

It is never too early to start your estate planning to manage your end-of-life affairs.  Our attorneys at Allen Gabe Law, P.C. have experience with estate planning and we can help you manage every aspect including drafting wills, trusts, and power of attorney documents.  We can also inform you of all applicable laws to help you make decisions regarding your finances, assets, and medical care so that your wishes can be legally carried out.

You can call Allen Gabe Law, P.C. at (847) 241-5000, Ext 121 to talk to one of our estate planning attorneys.


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