WHAT IS ESTATE PLANNING?
When people hear the words “estate planning,” the first thought or image that comes to their minds is typically dollar signs. “Estate planning” is often equated in the public eye as being only for the ultra-wealthy or people with a number of assets. However, that is simply not true. Estate planning is for everyone. As an Estate Planning Attorney, it is not only my role to help my clients create their estate plan, but I believe my most crucial role is to educate my clients and the general public about estate planning, including what it is, who it is for, and why it is necessary.
WHAT IS ESTATE PLANNING?
Estate planning is very simply the process of planning for your estate, assets, finances, healthcare, self, pets, and children prior to any catastrophic event. Such catastrophic events can include, but are not limited to: an unforeseen medical or psychological issue, financial strains, an inability to make decisions for yourself (known as mental incapacitation), or the death of a spouse, child, or yourself.
WHAT DOES AN ESTATE PLAN CONSIST OF?
Basic Estate Plans : A basic estate plan consists, at its core, of several key documents:
Financial Power of Attorney
Advanced Healthcare Directive
Will
A financial power of attorney is the document that declares who will be in control of your finances and assets when you can no longer make financial decisions for yourself. The State of Georgia has a standard form that we now use. You can elect to have the powers granted immediately or upon a certain event/ time. Most often, this event is a mental incapacitation, or when you are no longer able to make the decisions for yourself such as is the case of a coma or mental disease such as Alzheimer’s or dementia.
You will often see financial gurus advise the need for a “living will.” A living will, in the State of Georgia, is the same thing as an “Advanced Healthcare Directive.” The Advanced Healthcare Directive is a document in which you put into writing for both your loved ones and your medical providers your wishes for your medical treatment, your desires as to autopsies, organ donation, burial, cremation, life sustaining measures/treatment such as do not resuscitate (DNR), IV fluids and nourishment, ventilators/respirators, etc., and your general healthcare treatment preferences such as personal care home care, hospice care, blood transfusions, etc.
A will is one of the documents that takes effect upon your death. It names the executor of your estate, which is the individual that will make sure all of your debts, including funeral expenses, are paid, anyone that owes you/your estate money returns the funds, and distributes your assets. You decide what and to whom those assets are distributed, pending the resolution of all debts being paid. If you have minor children, you would include provisions in your will in regards to who will take guardianship of your children upon your passing. You could also include provisions for the care of any pets. The same for any business interests you may hold.
Intermediary and Advanced Estate Plans : More extensive planning will include forms of trusts, which will be discussed in detail in a later post. However, it should be noted that a trust does not require court oversight and gives you the absolute most control over your property both in life and after your death, including the ability to plan for various contingencies such as divorce, remarriage, adoption, addictions, pets, loved ones with special needs, and minors.
Intermediary estate plans will include all the elements of a basic estate plan, but will include some form of a trust in your will, sometimes known as a “pour-over will.” This will-based trust will provide protection to those inheriting from you as the trust would own the assets as opposed to your beneficiaries individually. However, when the trust is based within the will and is not a stand-alone trust or does not stem from a stand-alone trust, court involvement is still required and further estate planning attorney involvement for the establishment and oversight of the trust may be needed in the future.
Advanced Estate Plans will include one or more trusts, either under the will or stand-alone trusts. The benefits of these more advanced options is it gives you the most control of your assets and the distribution of them and avoids court involvement altogether.
WHY SHOULD I CREATE AN ESTATE PLAN?
Establish a solid financial plan
Give yourself, your loved ones, and your providers peace of mind
You stay in control in life and after death
Avoid probate court in life and after death
Reduce Estate Taxes
Protect from unforeseen creditors
Many people at the beginning of a new year will set their resolution to become more stable financially and begin this process by getting on a budget or setting savings goals. Did you know that an Estate Plan is considered an essential part of your financial plan, also? Financial advisors and gurus will often write and speak about the importance of having an estate plan in place and discuss, to the extent they are able, about making sure you get those documents in place as a part of your financial planning and preparation process. Creating and having a solid estate plan in place serves a number of purposes that creates a plan that gives you, your family, and loved ones peace of mind now and in time of great turbulence, frustration, and grief. You get to decide how your assets and healthcare are handled in your lifetime and what happens with your assets after your death. You hold the power and do not surrender any control to loved ones who may say one thing in life and do another in death or to the government.
Without a financial power of attorney or a medical healthcare directive, if you were to become physically or mentally incapacitated to the point of which you could no longer make medical or financial decisions for yourself, your loved one(s) would have to petition your local probate court for conservatorship for your finances and guardianship for your medical needs and physical care. This process could take a long time and could leave them in financial and emotional straits as they attempt to facilitate your care without any access to your finances or the power to sign documents on your behalf. Furthermore, they would be left without clear guidance from you about what you want and how you wish for things to be handled. Sure, we can “tell” our loved ones what we want, but in our experience, those conversations are often forgotten or they are unable to remember specifics when they are in these times of turmoil.
It is important to remember that both the financial power of attorney and the advanced healthcare directive are only effective while an individual is living. At the moment of death, these documents are no longer valid and either the individual’s will or trust will take place. If those documents are not in place, then your loved ones will have to petition a court to solve any remaining issues as to bills, debt collection, and distribution of your assets. Your executor will not be able to execute any of your wishes without first filing a petition with the court and being approved and sworn in. Due to the process for probate in Georgia, this could take a minimum of eight months, or more, before the process of distribution even begins. Not to mention, all of this is on public record, including your will.
If you did not have a will in place, your loved ones will have to petition the court for administration of your estate. This option leaves you with absolutely zero control of your assets and who gets what. It is determined by the state and is split according to who are your heirs at law, meaning your biological relatives, as opposed to your beneficiaries, which are the individuals and organizations you select to receive from your estate. Therefore, that piece of jewelry you wanted to leave your best friend or that donation you wanted to leave to your local church is no longer on the table. And what if you have no biological heirs? Your assets are sold and go to the state.
The other two benefits of planning are the reduction in estate taxes and protecting your loved ones and assets from unforeseen creditors. Estate or gift taxes are determined by state and/or federal statutes and change over time. This can mean that future revisions to your estate plan, especially if it is a basic plan, may be needed. Unforeseen creditors may be life events like divorce and lawsuits. A trust, even a trust under your will, can protect This, again, is mostly applicable to individuals who select to have trusts as part of their estate plans, and will be discussed in a more specific post in the future.
WHO IS AN ESTATE PLAN FOR?
As you can see, a basic estate plan is for anyone and everyone over the age of eighteen. There is no minimum requirement for assets or amount of money, though those considerations will be determinative of what kind of estate planning is appropriate for you. If you have been divorced and/or remarried or have adopted children (legally or in spirit), it is an important part of caring for your family to have an estate plan created that fits your specific family structure.
We highly recommend parents and grandparents consider gifting a basic estate plan to their child(ren) as a graduation gift as they prepare to go to college. While, no, their assets are not likely high upon graduation from high school, it is always a good idea, at a minimum to have financial powers of attorney and advanced medical health care directives in place as your child(ren) take their first step into adulthood, and in many cases, away from home. They may not yet be ready for a trust as they have not gone through enough life experiences to dictate the need, but at a minimum, it is a good idea to have someone designated to take control of making sure their bills are paid and their medical wishes honored in the event a catastrophic event happens. Talk about peace of mind for a parent in a time where a parent would certainly be distraught and overcome with worry and grief!
Another group of individuals who people often do not consider the need for estate planning, although the need is GREAT for these individuals, are any child(ren) who have special needs and will require assistance with their finances, day-to-day life, and medical care once they attain the age of eighteen (18). Having documents in place can ease the transition from the legal age of minority into the legal age of majority for parents and guardians of special needs individuals. If you are a parent or guardian of a special needs individual, proper estate planning can also help you plan and prepare for their care following your death or inability to continue their care. Individuals with minor children and pets also benefit greatly from estate planning as they can designate the physical and financial caretakers of their children as a part of their estate plan. You can also plan for their future care including payment for schooling beyond high school, extracurriculars, weddings, studying abroad, vacations, etc. The sky is the limit! Individuals who have obtained an inheritance from another individual who has passed will also benefit from estate planning as it can protect their inherited assets from any unforeseen creditors such as in the event of a divorce or lawsuit.
WHY SHOULDN’T I USE A STANDARD DOCUMENT OR AN ONLINE SERVICE?
A well-thought through estate plan considers all possibilities and is tailored to your specific family dynamics, assets, needs, and wishes. Online services simply do not offer the opportunity to discuss your individual needs and wishes or consider potential contingencies or consequences that are unique to your family structure. They are simply an input-output service and that means you could be left with an estate plan that does not allow for or do what you truly wished or wanted. This could create more confusion and arguments in a time where your loved ones are already overwhelmed with grief and frustration.
Both the financial power of attorney and the advanced healthcare directive allow you to choose a future triggering event to allow the powers to become effective in the event you elect to have them not become effective on the date of signing. An estate planning attorney will be able to walk you through the many options available to construct scenario(s) to determine whether or not the powers should become effective. While Georgia does now utilize a standard form for the financial power of attorney, some of the language in the current form can be extremely confusing for someone that is not prepared to understand the consequences of selecting certain items. Having your forms prepared by an experienced estate planning attorney means that each item will be explained to you in great detail and you will have the ability to have your questions answered before granting certain powers to someone else when it comes to your money and your assets.
The advanced healthcare directive form provides general guidance for life-sustaining measures. However, there is also a portion available in the same form that allows for more specific directions as to your care in which you can include instructions for medication management, personal care home preferences, hospice preferences, etc. A standard document production most likely will not encourage you to include, or even explore these specifics, and thus, there will be no guidance for your loved ones or healthcare providers. This means you lose control in your own healthcare at a time when you are already unable to express your wishes to your loved ones or providers. Each state has its own requirements for the documents in an estate plan to be considered valid, including witness and notary requirements and affidavits. While an online form can produce your documents, it will not be there with you when you are executing (or signing) the documents to make sure those requirements are being met. Furthermore, online services cannot provide testimony in the event of a contest as to whether you were “in your right mind” when the documents were prepared, that someone else did not draft those documents for you and sign your name to them, or give you or your loved ones any assurance that your wishes were actually captured in the document.
Proper estate planning with an experienced estate planning attorney will consider all of your circumstances including: your finances, your assets, your budget, your family structure, your family dynamics, your concerns about individuals that may “waste” their inheritance, or individuals you may wish to not leave anything to. Proper estate planning considers all of these circumstances and helps guide you in the best way to plan for these dynamics and contingencies and craft a plan of action for each of them instead of generically designating who gets what. You will get control of not only who and what, but when.
If you own a business or hold any business interest, an estate planning attorney will want to see your corporation or company operating agreements or bylaws to make sure that your estate planning documents, including any powers of attorney, wills, or trusts match and comply with those documents so that your business legacy is not caught in the crosshairs of confusion in a time of incapacitation or death. Many individuals that start their estate planning journey hold real property (or real estate). Whether land or houses, estate planning documents affect those holdings both in life and after death. An experienced estate planning attorney will be able to make sure that any gifting of real property holdings is properly done with proper deed selections, legal descriptions and recording, including any powers of attorney.
The estate planning process can be overwhelming, but with an experienced estate planning attorney who cares about preserving your wishes and your legacy, it can be a stress-free process where you leave the process knowing what your plan is, how it works, and that what you want to happen will be what happens. It should also come with some assurance that if things change, you will be able to return and have your plan updated to meet any changes or needs you may have in the future. Our wishes and circumstances often change and your estate plan needs to be able to grow and change with you.
At Turner Jones Legal, LLC we pride ourselves on being Your Hometown Attorney and being able to provide all these services and more to our hometown. We want to grow your legacy with you. Your legacy truly is our passion! If you have any questions, please do not hesitate to visit our social media sites for short videos on some of the topics contained herein, continue to watch our blog for more detailed posts. If you are ready to start your Georgia estate planning, please call our office and schedule your consultation by calling (706) 359-3332 today!