Estate Planning: it is something most Americans avoid and more often than not, never get around to.  The excuses range from “Estate planning is too confusing” to “I don’t have anything to leave behind” to “I will get around to it next year.”  By having an estate plan, however, one offers one’s family members peace of mind during a difficult period.

The four main documents in an estate plan are: Will, Trust, Durable Power of Attorney for Finances, and Advance Directive for Health Care.

A Will is the legal instrument that permits a person to make decisions on how his or her estate will be managed and distributed after death.  If there is no Will, the person has died intestate and State laws will dictate how the estate is distributed.  It is important to note that a Will does not avoid probate (the legal process in which a decedent’s assets are distributed under court supervision); however, it will ensure your assets are distributed to the people and in the manner you desire.

One of the simplest ways to avoid probate, a Trust is a legal arrangement in which a Trustee holds legal title to property for a beneficiary. There are three main “players” in a Trust: Settlor, Trustee, and Beneficiary.  The Settlor is typically the only person who can make changes to the Trust document. In a conventional living (or intervivos) Trust, the Settlor, Beneficiary, and Trustee are initially the same person. It is only when the Settlor becomes unable to handle his or her own financial affairs that a successor Trustee (chosen by the Settlor) takes over the management of the Trust. The Trust assets are to be used first and foremost for the benefit of the Settlor, with the remainder beneficiaries receiving an interest in the Trust only after the Settlor’s death (the same way that a person’s estate passes to his or her beneficiaries under a Will).

The Durable Power of Attorney for Finances (DPA) names the person responsible for managing your finances in the event you are unable to manage them yourself.  Even in a Trust-centered estate plan, the DPA plays an important role, governing the assets held outside the Trust.  In the event of your incapacity, your successor Trustee will take over and manage your Trust assets while your agent under the DPA will manage all non-trust assets.

An Advance Directive for Health Care combines a power of attorney for health care and a living will, or directive to physicians, into one document.  It allows you to name an agent to speak with the doctors and make health care decisions for you if you are unable to make them on your own. 

When properly drafted, an estate plan is a powerful tool not only in the event of person’s death, but also during the person’s life.  When deciding on a professional to assist you in drawing up your estate plan, be sure to choose someone who specializes in this area of law.  This will help ensure your plan works effectively not only after your death, but during your life as well.

As we move through life, what we want and who we want in charge changes.  Estate plans are designed to grow and develop as we do and would be reviewed periodically.  I recommend reviewing your plan on an annual basis – you may not need to change it each year, but looking at it each will help keep it fresh in your mind, as well as help ensure any necessary changes are caught and addressed quickly.

If you have an estate plan already in place and want to be certain it meets your needs, I am happy to review it with you.  An estate planning attorney in California since 2001, and now also licensed to practice law in Oregon, I am uniquely qualified to review your current plan with you and help you make any changes which may be desired.