An estate plan is simply a set of legally enforceable documents that dictate where your assets go, who will manage them if you have a trust, who your executor will be a and your choice for the guardian of any minor children.
Experience has taught me that there is a great deal of confusion regarding estate plans and the terminology that is used. This blog is not a substitute for legal counsel, however I will attempt to demystify the estate planning process. Estate planning is a process that should continue for the rest of your life. Circumstances change. Minors become adults, financial sistuations change, divorces happen and a host of other life events. Therefore, there is no one should say “my estate plan is finished”. These documents need to be reviewed every two years or whenever any significant life change occurs, or the laws change.
Estate planning could be broken down into three processes: distribution planning, disability planning, and end of life decision planning. Almost everyone know what a will is for, but fewer people understand disability planning documents like powers of attorney.
With a will, you are dead and there is no room for doubt. A legal death can have the same effect as actual death but creates a number of difficult problems. Legal death is simply a state where you can no longer legally make decisions for yourself. These decisions could be related to financial matters or health-care matters. This condition of legal death can last for a few days, weeks or months and be causes by an accident, a stroke, severe pain or an illness. Most of all, incapacity can happen to any one at any age, at any time. The reason this situation is so problematic is banks and doctors can not act on your wishes if you do not understand the consequences of your decisions and without the proper documents, court intervention may be required. Unlike death, incapacity is not always clear cut. Doctors and family members may not agree on whether you or your love one is incapacitated. Other pages will discuss incapacity in more detail.
Moving on – end of life decisions are also part of, or should be part of an estate plan. A women in Florida who was in a vegetative state for years popularized the need for end of life documents. You may remember her name -Terry Schiavo. The story is heartbreaking. The documents that deal with these end of life decisions are called advanced directives or a living will. People often mistake a living trust for a living will but there are completely different. Put simple advance directives, directives to physicians, and living wills are all terms for the same documents. They outline what you want to happen if you have a terminal illness so your family does not have to agonize over it. As an example, some people want all attempts a resuscitation carried out regardless of the realistic outcome while others do not.
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