At least in Virginia, people may think the term “estate planning” applies only to those well-heeled, wealthy types who reside on horse farms or mansions in the countryside. This notion is misguided. The rest of us can also benefit greatly from estate planning.
An “estate” refers to one’s home and other property items; cars, furniture, and other tangible items; as well as assets such as bank accounts, investments, and pension or social security benefits. Drafting a will or living trust is an effective method for deciding how these items will be transferred according to your wishes.
Parents often name a guardian for minor children in their will. Even if a guardian is chosen for children, the question still remains as to whether this person--or others-- will make financial decisions with the resources from your estate. This is where estate planning really gets interesting.
Estate planning involves three major themes: preserving, managing, and distributing assets. In terms of preserving assets, a good estate planning professional will suggest strategies for minimizing tax liability and guarding against creditor claims. For some families, a family limited partnership, an investment vehicle that pools assets, can serve this function.
In terms of the second function of estate planning, managing assets, a starting point is drafting a durable power of attorney, which allows a named individual to handle your bills, investments, and other financial affairs in the event of incapacity, or when you are no longer able to manage your own financial affairs.
Finally, in terms of distributing assets via an estate plan, think carefully about whether you would like to leave your belongings to one person, several people, or include charitable causes meaningful to you. Common advice is to ensure your will is clear, (i.e. “I leave all my possessions to my two children, split 50-50), and provide detailed information about your wishes in a separate document, (i.e. “My wedding ring will go to my daughter, and my vintage train set goes to my son.”).
Finally, an estate plan is not complete without four important healthcare clauses: (1) a health care power of attorney, which names the person you wish to make health decisions for you in case you an unable to do so; (2) a HIPPA waiver, authorizing someone (often the same individual), to speak with doctors about your condition, in the event you are unable to do so; (3) a Directive to Physicians (a “living will”), which explains your wishes about life-saving care to medical professionals; and finally, (4) a Declaration of Guardian form naming an individual to take care of you if you do become incapacitated. These documents can be emotionally complex for some; however, they can provide necessary relief to your family in the event they are needed in a medical setting. We usually consolidate all four clauses into an advanced medical directive.
For help with preserving, managing, and distributing assets through an estate plan, call Smith Strong at 804-325-1245 or 757-941-4298 to meet with our team in either our Richmond or Williamsburg, Virginia law office.