Estate planning is not just a matter of what follows your death but also of how you manage your life and help your family know how to take over. It is not always easy to know what kinds of documents or legal instruments you need to create to keep your house in order or what they should say.
Naturally, everyone’s needs differ, depending on their assets and their family’s situation. However, attorneys often propose an estate plan based on these five instruments.
Also called a “living will,” an advance directive for health care specifies your wishes for medical treatment when you are incapacitated. Georgia state law sets out a form for the advance directive that allows you to select:
- A health care agent—someone whom you can trust to make medical decisions for you when you are unable to
- Your treatment preferences during your incapacity, including the types of lifesaving procedures you would be willing to undergo
- A guardian to assume longer-term responsibility for you, if it becomes necessary
A clear advance directive can prevent suffering for you and for your loved ones, who may otherwise quarrel among themselves about your treatment. Even when you are relatively young, an advance directive may save your family a great deal of heartache in the event of a sudden catastrophic injury.
Durable Power of Attorney
If you become incapacitated, you will still need someone to pay your bills as they come due, and you may also need them to carry out other business obligations. Granting someone a durable power of attorney (POA) allows them to take care of these needs for you, as well as to handle your family’s financial needs, if any.
You may specify whatever powers you wish them to have and when you want their authority to begin—in the present or in the future, springing into existence when you become ill or when a particular event occurs. And you can revoke it when you recover or specify that it ends at some other point.
Certain financial instruments and contracts, including retirement accounts, insurance policies, and bank accounts that are payable on death (POD), allow you to designate beneficiaries. Upon your death, the beneficiary automatically assumes ownership rights. The property does not pass through probate—in fact, a beneficiary designation supersedes a gift written in a will, since the money does not belong to the probate estate.
For a bank account, a quick transfer can be vital to allow a beneficiary access to the money they need in the days and weeks after your passing. Since there are no further conditions on receipt, a beneficiary designation is best suited to a spouse or other adult loved one who may be trusted with outright possession of the money.
A properly executed living trust can also keep your property out of probate, making it immediately available to those you wish to have it. And a living trust—that is, one you make during your lifetime—can also be revocable, subject to termination whenever necessary.
When you create a trust by handing over your property to a trustee according to the terms of a trust instrument, you are no longer its legal owner. Therefore, it is not technically part of the probate estate when you die. Older people who want to transfer real estate to family members often use living trusts to do so. The trust instrument can specify that ownership does not pass to the family members until after the death of the “settlor” of the trust. (The settlor is the trust maker. You may hear other words like grantor, donor, trustor which all mean the one who made the trust, the trust maker.)
Irrevocable trusts may also be used to properly navigate certain types of taxes and obligations, including Medicaid income limitations and liens. However, such trusts must be carefully drafted by an attorney who is an expert on the subject matter and sometimes require state approval. Be sure to consult an experienced attorney about these options.
Last Will and Testament
The will is the traditional foundation of an estate plan. It states the final wishes of the deceased (also known as the decedent) for the disposition of their estate.
The estate includes everything belonging to the decedent—the “probate assets”—all of which has to pass through probate court proceedings before heirs or beneficiaries can receive it. It does not include property that passed from the decedent at the moment of death, such as bank accounts POD, real estate held in joint tenancy, beneficiary designated IRAs or anything else that the decedent did not legally own.
The less property the court has to deal with, the better—no one wants to spend time waiting on proceedings in probate court. An estate planning attorney can help you keep as much property out of probate court as possible, reducing expenses and delay for your family.
Nonetheless, maintaining up-to-date documents remains important, especially if you are married or have minor children. If you are married, both of your wills should address the possibility of your simultaneous death—what would happen if, for example, the two of you were in a car accident together. If you name a prospective guardian for your minor children in your will, the judge will understand your wishes in the guardianship proceedings. Furthermore, a person who dies without a will and leaves a spouse and children may leave a tangle of legal obligations that accidentally sets the family against each other.
For guidance with your will, trusts, or any other estate matter in Georgia, contact Bascom Law P.C. to schedule a consultation. Mike Bascom is an experienced probate attorney and can assist you with an estate of any size. Call our Forsyth County office at 770-285-5493 for a free case evaluation.