This is an article from The Law Firm of Evan H. Farr, P.C. in Fairfax Virginia that we thought others may find helpful.
When many people think of estate planning, they assume that a person’s heirs are his or her children. But what happens when a couple has no children? Do they need to plan too? The answer is yes. At the very least, they should answer two questions: who will inherit their property, and who should handle their affairs if they become incapacitated?
As an example, assume a childless couple without estate planning documents in place is in a car accident that immediately kills one of them while the other survives for a short time. In most cases, the second-to-die spouse’s family will inherit 100% of their common estate, while the first-to-die spouse’s family is essentially disinherited. And, if there aren’t any relatives on that side of the marriage, the state takes it all. This is probably not what the couple would have intended. This problem can be alleviated by properly drafted estate planning documents. So what documents are needed?
- Revocable Living Trust: To spell out how your assets are to be distributed, you should transfer your assets, during life or at death, to a revocable living trust. This strategy protects your assets from having to go through probate, which is an expensive, public, and time-consuming nightmare…
- Financial Powers of Attorney and Advance Medical Directives empower someone you choose to make financial and medical decisions—including end-of-life decisions—on your behalf, should you become incapacitated. Spouses can appoint each other, but it is wise to have a “Plan B,” which involves naming another (preferably younger) person to serve simultaneously or in succession.
Updating an Estate Plan
Remember, things change in life . . . such as your health, your family situation, your marital status, your financial situation, and the people you trust to make decisions on your behalf . . . and once an estate plan is in place, it needs to be updated regularly in order to take these things into account. In fact, failing to make regular updates to your estate plan can have disastrous consequences. We recommend reviewing your estate plan annually and making changes as soon as they become necessary…
Choosing a Fiduciary
So, now that you know which documents you need, how do you decide who should handle your affairs should you become incapacitated or die? Selecting the people to carry out the provisions of an incapacity and estate plan is one of the most important and difficult tasks involved in the estate planning process. There are professional fiduciaries that can be hired as agents to handle your financial affairs upon death or disability. Some geriatric care managers will agree to serve as health-care agents. Other possible candidates are trusted nieces, nephews, friends, neighbors, clergy, siblings and cousins. Below are some considerations you should take into account to determine who to choose:
- Would be willing to act on your wishes, even if they conflict with his or her own feelings;
- Lives close by, or would be willing to travel, if needed;
- Knows you well enough to recognize what’s most important for you;
- Can handle the responsibility without feeling over-burdened;
- Is willing to talk with you now about sensitive issues, will make sound decisions, and listen to your wishes;
- Is healthy enough to be available so serve long into the future;
- Would be firm enough to stand up to a situation where conflicting opinions between family members and medical providers might arise;
- Won’t back down in the event of an unresponsive doctor or health institution.
Most people work their entire lives to accumulate what they own. Whether you have children or are childless, everyone needs the peace of mind that comes with making sure that their legal and financial affairs are taken care of if they become incapacitated, that decisions about health care are carried out the way they’d like even if they’re not able to make them, and that their loved ones are taken care of when that time eventually comes.
- Estate Planning is Essential Whether You Are Married or Not - April 25, 2018
- Income Tax Basis in Estate Planning – Part 2 - April 23, 2018
- The Downsizing Generation: How to Handle a Surplus of Stuff When a Loved One Ages - April 18, 2018