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Essentials of Estate Planning

Estate, Gift, & Trust Planning

What is Estate Planning?

What happens to your money, property, or debts after you’re gone? When you have an estate plan, you get to decide. Simply put, an estate plan is a strategy for transferring your assets to those you leave behind. By establishing one, you can choose your beneficiaries, minimize certain taxes, provide guidance, and more.

The tools and components that go into creating an estate plan can:

  • Protect estate from incapacity
  • Determine who gets what, how, and when
  • Trusts for minors (and adults)
  • Minimize estate taxes
  • Reduce expenses and avoid delays
  • Provide liquidity
  • Control


A Will

Why do I need this? In general, anyone should have a will if they are over 18. A will is used to direct how your assets will be distributed after your death. Without one, the state (often the state you lived in at the time of your death) determines who gets your property, regardless of your wishes to the contrary.

State laws usually distribute a decedent’s property to a surviving spouse or biological (blood) relatives (like parents, siblings, and children). These laws vary from state to state, and they may not distribute the assets as the decedent would have intended. For example, a non-spouse surviving partner of the decedent may get bypassed. This would result in assets passing to the deceased’s parents or siblings. Also, many states have state-specific “estate and inheritance taxes,” which tax according to the degree of kinship. The more distant the beneficiary, the higher the taxes may be.

Health Care Proxy

Is it really important? It’s critical. A Health Care Proxy, known in some states as a Health Care Power of Attorney (POA), identifies the person you designate to make your health care decisions if you cannot speak for yourself. In some states, hospitals, doctors, and courts may look to the next of kin (spouse or closest biological blood relative) to make your medical decisions if there isn’t a valid Health Care Proxy in place.

If you are single, you should not assume that in all states, a partner or friend can make medical decisions for an incapacitated person without a valid Health Care Proxy. Regardless of your marital status, you should have one and keep it up to date and, when traveling, keep a copy with you.


Is a Health Care Proxy the same as a Living Will?

A Living Will allows you to list medical treatments that you would or would not want if you become terminally ill and unable to make your own decisions. A Health Care Proxy designates another person to make medical decisions should you be unable to do so. Sometimes the two will be combined into the same document, but they serve different purposes.

Durable Power of Attorney

How does this help? A Durable Power of Attorney (POA) is used to designate a person who can make financial decisions for you in the event you cannot make them for yourself. This individual would have the power to access and control your assets and act on your behalf with your financial institutions. You can allow the person you designate to pay your bills, run your business, sell your house, etc. Even if you are married, if your spouse is not shown as an owner of an asset, your spouse cannot access or control the asset. However, if there is no POA, you lose control in deciding who this person will be, and a court may appoint an unwanted family member to control your finances. Therefore, just like with a Health Care Proxy, having a valid POA that names the person of your choice is important.

Special Bequests

You need to specify if there are any particular items (art, jewelry, heirlooms, etc.) that you want to go to specific people/ children, etc. These provisions can be included in your will or in a Personal Property Memorandum, a side letter that can change from time to time without changing your will. To make your memorandum legally binding, you just refer to it in your will. You also may want to include distributions to individuals other than your children or to charitable organizations. You don’t have to sign the memorandum in front of witnesses as you would a will.

Common Diaster Clause

It is best to include a provision to direct your assets if both spouses and children are to die simultaneously and there is no certainty who died first, an important issue in the determination of the inheritance of property or the distribution of proceeds of a life insurance policy. Frequently assets will be directed to parents, siblings, nieces, nephews, etc.

We're here to help

While the future holds many unknowns, you can ensure your wishes are carried out by having the proper estate planning documents. When you’re developing a plan for your estate, it’s important to understand your entire financial picture. That’s where we come in. Working with your tax and legal advisors, we will help ensure that your plan reflects your wishes for your legacy.