Estate Planning - Remember the Basics


Volume 8 • Issue 3 • March 2018

The Counselor is a monthly newsletter of Hallock & Hallock dedicated to providing useful information on estate planning, business succession planning and charitable planning issues. In this month’s issue, we will discuss getting back to the basics. If you are interested in learning more about the ideas and processes discussed in this newsletter, please contact us for an initial consultation.

ILITs, CLATs, CRUTs, GRATs, IDITs, DINGs, etc.  It is easy to get lost in the alphabet soup of complex estate planning techniques meant to provide incredible tax savings or asset protection, but estate planning is not only for people who need this kind of planning.  Estate planning is for everyone.  So be aware that there may be a tool to solve your unique problem, but don’t lose focus on the real power of estate planning that can come through some of the most basic planning techniques.  While some will require more complex strategies, the goals of many families can be met with the basic documents in the modern estate plan.  These documents are as follows:

Revocable Living Trust – A Trust is a legal arrangement where one person, the Trustee, owns property given by another person, the Grantor (also referred to as a Settlor, Trustor, or Trust Maker) for the benefit of a third person, the beneficiary.  Perhaps the most common type of Trust is the “Revocable Living Trust.”  Revocable Living Trusts are fully revocable and amendable at the request of the Grantor (and you, generally, are the Grantor, Trustee and Beneficiary while you are alive and able). Assets transferred (or “funded”) into a Revocable Living Trust can be withdrawn at any time.  “Living” refers to the fact that it is established while you are alive and remains under your control until your death or incapacity.  Revocable Living Trusts can be used to avoid a guardianship/conservatorship proceeding (sometimes referred to as a “living probate”) in the event you become incompetent.  Properly funded, a Revocable Living Trust will also allow your heirs to avoid probate with its attendant costs.  A minor child inheriting through a Trust will not require a conservatorship.  Finally, Revocable Living Trusts can be drafted to ensure that neither spouse’s estate tax exemption is lost.

Pour-Over Will – A “Will” or a “Last Will and Testament” is a legal document that tells the probate court how you want your property distributed after you die, and who has the power and responsibility to wind up your affairs.  A Will is purely a death instrument and is only effective when “probated.”  Because the Will takes effect only after a court determines that it is a valid document, a judge must act before your personal representative or executor can step in and manage your estate.  In a Trust based plan, the Will acts as a “pour-over” to ensure that any assets not properly titled in the name of Trust will ultimately pass according to the terms of the Trust.  The Will is also the appropriate place to identify the guardians for your minor or disabled child(ren).

Financial Durable Power of Attorney – In the event you become disabled to the point of no longer being able to make decisions yourself,  a carefully written durable power of attorney will allow you to name someone you trust to make those decisions for you. The Financial Durable Power of Attorney allows you to appoint an individual to act on your behalf for financial matters not covered by your Trust.

Health Care Power of Attorney and Living Will or Advance Health Care Directive – Known by different names depending on your state.  These documents allow your trusted friend or family member to make medical treatment decisions for you, including end of life decisions, if you are unable to communicate your wishes to doctors. Without these documents in place, you must have a guardian or conservator appointed by the court before decisions can be made on your behalf.

HIPAA Authorization – With strong laws in place to protect your private health care information, the HIPAA Authorization allows you to identify who can access your confidential medical records.  Extending the powers granted in this document beyond your death can allow loved ones to access these records without the need of court involvement.

Many people think they are either too young or their estate is too small to be planned.  However, if you fit into any of the following categories, you could benefit from some form of estate planning:

  • You are 18 years of age or older

  • You have a retirement plan

  • You have life insurance

  • You are married

  • You are getting re-married

  • You have minor and/or disabled children

  • You are in a blended family

  • You are a widow or widower

  • You own a business

  • You want to leave something to charity

Regardless of the current tax law or the size of your estate, incredible benefits always exist in the basics. If you would like to discuss your estate plan in more detail please call our office today.

This Newsletter is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.