Estate Planning Essentials

By Andrea Young on September 13, 2022

By Frank Censullo, MSFP
Senior Relationship Manager 

Design or Default 

As is often said, everyone has an estate plan. It’s just a question of whether or not you created it or settled for the one provided for you under the intestacy laws of your state of residence. Most folks don’t realize this, nor are they aware that, no matter how large or small, they do, in fact, have an estate. 

When it comes to managing your personal and financial affairs, you’re likely to want to have a say in the matter, and that’s where proper planning comes into play. An estate plan need not be terribly complex or expensive, but should carefully detail your intentions in the event you are unable to communicate them. 

Essential Documents 

Importantly, your estate plan is not just about the distribution of property after your death. It also explains how you’d like to have your health and wealth managed for you, if necessary, while you’re still alive. Here is an overview of the essential documents that should be part of everyone’s estate plan. 

  • Will- Sometimes referred to as your Last Will and Testament, this document guides the disposition of your property, both tangible and intangible, after your death. In it, you’ll name an Executor who will be responsible for carrying out your wishes. You don’t have to share a copy of the will with your Executor, but it’s a good idea to let him or her know your intentions. You’ll also name a guardian for your children. Of note, having a will does not mean your estate will avoid the potentially costly and certainly public probate process. You’ll need a trust for that (see below). 
  • Health Care Proxy-Also known as a Medical Power of Attorney, this empowers the person of your choice to make medical decisions for you in the event of your incapacity. This person need not have medical training but should understand your preferences and, ideally, possess the ability to remain calm in the face of a health-related crisis. 
  • Durable Power of Attorney- Similar to a Health Care Proxy, this empowers the person of your choice to act as your agent and make financial decisions for you in the event of your incapacity. Think carefully about you and your family’s financial affairs: you’ll want to pick someone capable of managing them in the event you’re unable to do so. 
  • Living Will- Also known as an Advance Directive, this allows you to document your wishes with respect to extraordinary life-saving efforts that could potentially be taken in order to prolong your life. It alleviates some of the emotional burden that might otherwise be placed on your loved ones and ensures your end-of-life will proceed in a thoughtful and dignified manner. 
  • HIPAA Release- HIPAA refers to the Health Insurance Portability and Accountability Act of 1996. A signed release allows your health care providers to communicate with family members, friends, or anyone else you designate about your medical situation. Don’t forget: once your children reach the age of 18 and go off to work or school, they will be treated as adults by health care practitioners and will enjoy the same privacy rights as you. They’ll need to sign HIPAA releases of their own if they want to grant you access to their medical information. 

Thinking Ahead 

As many people do, you’re likely to name your spouse as your Executor and/or agent, but be sure to name competent successors. In the event of a tragic accident involving both of you, your hand-picked successor will then be called upon to act. name competent successors. 

Understanding Probate 

As alluded to earlier, probate is the process by which your will is affirmed by a judge, and your Executor is empowered to act on your behalf. It is a public process (raising privacy concerns for some families) that can take several months to complete and can be costly, particularly if your will is contested. Any costs will be borne by your estate. 

What about a Trust? 

In order to mitigate the complications of probate, you might choose to utilize a trust. A trust is a written legal agreement that designates who (one or more trustees) will be responsible for managing and, ultimately, distributing the assets you put into it. Trusts fall into one of two basic categories: revocable and irrevocable. As you might expect, a revocable trust can be changed (or even revoked) during the life of the person who created it. Irrevocable trusts, on the other hand, can only be changed in certain limited ways (such as who serves as trustee). 

When you fund a revocable trust, you retain control (you can be the sole trustee of your own revocable trust) of the assets and have unfettered access to them. As a result, the assets remain part of your estate but will not be subject to probate. A properly written irrevocable trust, on the other hand, is a separate legal entity. Any assets contributed to such a trust are removed from your estate and, to a certain extent, from your control. They will thereafter be managed according to the terms of the trust by your designated trustee. 

Whether or not you need a trust will often depend on the size and complexity of your estate. Some families can get by without one, but others may find that by having one, they are better able to manage issues related to privacy, taxes, creditors, family dynamics, or philanthropy. 

Speak with an Attorney 

Of course, your particular circumstances might call for additional planning and/or documentation, and we recommend you consult with a qualified estate planning attorney. If you don’t have one, we can refer you. There is a cost, to be sure, but you’re likely to find the peace of mind that comes from knowing your affairs will be settled according to your wishes will be well worth it.  



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