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What Is Estate Planning And Why Is It Important?
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What Is Estate Planning And Why Is It Important?

What is Estate Planning?

We’ve all heard the term, but what does it mean?  “Planning” is how we look into the short-term and long-term future, and then take actions now, to receive the best possible outcomes.  While we can’t be sure what’s going to happen in the future – not even what will happen later today – we can evaluate the various possibilities and try to do meaningful things now, so that when and if something happens, we will be ready and able to control (to the best extent possible) the situation of the moment.

What is the “estate”?  Most people think an estate is a house and personal property.  While that can be true, an estate is so much more.  Legally, an estate is how the legal system views someone’s net worth, or basically, everything you own, and, how it’s managed and distributed.  So, it also addresses: your values and traditions; your health care needs; provisions for your children (particularly minor children); and, financial actions on an ongoing basis and into the future (even beyond your death).

Putting it together, “Estate Planning” is legally documenting your wishes, including how you want to pass “everything you own” to those who matter most, after you’re gone.  It also includes planning for how you will pass on your values and traditions, controlling what happens to your minor children, dealing with a loss of capacity during your lifetime, in order to take care of your own finances and medical decisions, and minimizing difficulties for your family (such as going to court to sort out your estate- which could happen while you are still alive if you lose capacity, as well as after you are gone.

Do I Need To Do Estate Planning?

The shortest answer is Yes.  Although it’s difficult to think about, the reality is – we will not be here forever.  Although we know that “when” is a certainty, we don’t know the moment it will happen.  So, starting the process of planning is crucial at any age and any wealth level.  Because everyone’s situation is different, your requirements for planning will be unique to you and your family dynamics.

What Happens If I Don’t Plan?

About 40% of Americans don’t have any planning in place when they die.  The reasons range from them not wanting to deal with the emotion issues related to death, they don’t think they are old enough to plan, they are busy and don’t “have time” to plan, they don’t think they are wealthy enough to plan, or they think the subject is too complicate and they don’t know who the right person is to help them.

Those, of the 40%, who become incapacitated or pass away without a plan, are handing over all their decision-making power to the government.  With so many people not planning, the government has created a scheme that does the planning for them with a general one-size-fits-all plan for them, that most likely does not resemble anything they would like to see happen.

Without advance planning, if you become mentally or physically disabled, unable to conduct business or take care of your personal finances, and your name is on the title of your assets, only a court can decide who will take over those responsibilities.  The court may appoint someone who would be the last person you would choose or a total stranger.  The court, not your family, will control how your assets are used for your care.  This process can become costly and burdensome and is a serious emotional strain on your family. And, the process is open to the public (in court records).  If you happen to recover, the court process could also be time consuming and difficult to terminate.

When you die, if you did not create your estate plan, distribution of your assets will follow the probate laws in your state.  In New York, for instance, the court process is called “intestate administration “.  The process varies greatly from state to state, but it can become expensive with legal fees, executor fees, and court costs. It can also take several months, over a year, or much longer. There are exceptions, but in most cases, probate files are open to the public and family members, whether you want them to receive your belongings or not, are given an opportunity to come forward and claim a share of your estate. Essentially, the court system, not your family, controls the process, deciding who ultimately gets what.

What Are The Basic Elements Of Estate Planning?

The basic elements of estate planning (though, depending on your situation, it could be more complicated) are:

  • A Will;
  • A Living Trust;
  • Durable Power of Attorney; and
  • Medical Directives (Healthcare Power of Attorney, Living Will and HIPAA Authorization).

A Will: A Will is a document stating your final instructions for distribution of your estate and who should care for your minor children, but it doesn’t avoid probateBefore your executor can make any distributions of your assets, which are titled in your name or directed by your Will, the court must validate your Will and approve your executor through the state’s probate process.

A Living Trust: It’s a legal agreement between three parties:

  • The TrustmakerThis is the person(s) who creates the Trust agreement, also commonly referred to as the Grantor, Trustor or Settlor, and transfers their belongings to the trust.
  • The Trustee: This can be a person or entity, responsible for managing the real property and other assets the Trustmaker transfers into the Trust.
  • The Beneficiary: These people or entities receive the Trust property.

There are many different types of Trusts designed to fit varying needs.  Nonetheless, if you have a Trust, there’s no waiting for court appointments or approvals, your Trustee already controls your assets, is guided by your Trust terms and instructions, and the probate process can be avoided. Also, with a Trust, your Trustee can quickly distribute your assets, according to your directions, which can be modified at any time while you are still alive and well.

Another significant advantage of a Trust is, it operates while you are alive.  A Living Trust allows you to plan for mental incapacity and disability. This is possible because you can name a Trustee to step in to take control over your financial affairs, if you’re unable to manage yourself, which avoids having the court choose a conservator or guardian to act for you.

A Durable Power Of Attorney: This is a legal document assigning an agent, who will act on your behalf, managing your finances, when you are unable to act for yourself.  You can change it or revoke it, if you are alive and have the mental capacity to do so.

Medical Directive (Healthcare power of attorney/Proxy): It is a legal document which designates another individual (typically a spouse or family member) to make important healthcare decisions on your behalf in the event of incapacity.  Without these, you lose control, and doctors and hospitals make these crucial decisions, if you are not able and you don’t have the right legal documentation in place.

You now have the basics and really have no excuse to avoid taking the next steps for your estate planning.  You don’t have to lose control of your future – take control now and do your planning today, with a professional, patient, and caring expert, your counseling-based estate planning attorney.

About Us

At Monet Binder Law, protecting and guiding you and your family is our primary focus. Each family is special and everyone’s situation is unique, so we take the time to understand what you and your family need. With that in mind, we create legal solutions, to make sure your family is protected now and in the future.

Contact Information

Address:

Executive Office Center

61-43 186th Street

Fresh Meadows, NY  11365

And

2361 Nostrand Avenue

Brooklyn, NY 11210

Phone:

718.514.7575

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