[caption id="attachment_42964" align="alignleft" width="176" caption="Genevieve Larson"][/caption]
People have a natural reluctance to talk about their own death or incapacity, let alone planning for either event. This is especially true if you’ve just gotten married and are starting a family or have just graduated from college and are starting your first job. The thought of death or incapacity is the farthest thing from your mind as these events are at least 50 years away, right?
However, death and incapacity are rarely planned events and timing is impossible to predict. Life-changing events such as marriage, divorce, the birth of a child or the death of a loved one motivate many to get serious about the need for an estate plan. Regardless of the source of motivation, all adults should have an estate plan notwithstanding their wealth, marital status or parental status. It is never too soon to start planning. In fact, you may have already begun the process without even knowing it, as most people have already engaged in forms of estate planning – a beneficiary form completed for a life insurance policy or a 401(k) plan at work, or a healthcare directive completed upon admittance to a hospital. Planning is most successful if it is intentional and comprehensive as it will capture your wishes more accurately.
Estate planning is a process. It ensures that your affairs are in order in a way that minimizes taxes, legal costs, court intervention and stress. More importantly, it will provide you with peace of mind and preparedness for your family when dealing with the inevitable. Contrary to what you may think, estate planning is not just about taxes. Estate planning addresses issues including distribution of property at your death, the naming of an agent to manage your financial affairs during your lifetime if you are unable to do so, the naming of a guardian to raise your minor children, and the appointment of an agent to make healthcare decisions. Key estate planning documents
An estate plan should be tailored and specific to your unique life circumstances. The foundational documents for a basic estate plan include a will and/or trust, durable power of attorney, and an advance healthcare directive. If you have one or more minor children, nomination of a guardian may also be included in your set of documents.Trust Agreement
A trust is an agreement that provides instruction on how to manage and distribute property. When you create a trust (as the “Grantor” or “Trustor”), you transfer property into the name of trust to be managed by you or someone else chosen by you (the “Trustee”) for your benefit or the benefit of another (the “Beneficiary”). Although there are different types of trusts, a basic plan includes a revocable trust. With such a trust, you are almost always the Grantor, Beneficiary and Trustee so that during your lifetime you maintain total management and control over your property. It is at death or incapacity that the successor Trustee follows the instructions provided by you for further management and distribution of your property.
A trust can include tax-saving strategies and may be as simple or as complex as needed in order to meet your wishes for the management and distribution of your property. It also has the added bonus of avoiding court supervision. In designing a trust, key considerations include (1) who will be the Trustee; (2) to whom your property will be distributed; and (3) how your property will be distributed: outright, in trust, or in installments over time. Will