Benjamin Franklin, the great American statesman once said that in Life, only two things are certain – death and taxes. Yet, very few people plan for their mortality and this often results in chaos. The assets and resources they spent most of their lives working hard to accumulate may become abandoned or dissipated when they are gone to the bewilderment of their descendants. Although no one likes to talk about it, thinking about death is one of those melancholic things that we nonetheless ought to do. Death will happen to us all Although we do not know when it would happen, death will happen to us all. Hence, the pragmatic approach to handling our state of affairs is to plan our estates.
In the event of sudden death or incapacitation of a person who has not planned their estate, his or her children and dependents are usually worst hit; thrown into confusion and possible deadlock on what to do with the said deceased person’s assets. Estate Planning is the process of making sure you have the appropriate legal instructions in place to ensure your assets go to the desired people in an efficient manner and are well managed. Estate planning is not only about planning for death but also about planning for one’s possible incapacity as well.
Some of the most popular tools for planning an estate include Wills and Trusts. Life Insurance, Joint Ownership, Deeds of Gift, Corporations and Powers of Attorney are also examples of Estate Planning. Some of those estate planning methods are discussed below.
There is almost always a need to have a Will – an incredibly vital estate planning document. A Will not only allows you to choose who receives your assets when you pass away, but also who looks after the interest of your wards and children if they are still minors at the time of demise. When an individual dies Intestate (without a Will) or is incapacitated, there are often conflicts and complications that may arise; leaving the estate to relatives or the State to administer (intestate Succession). Intestate Succession usually takes a longer time and your dependents may have minimal or no control over where your assets end up.
A Trust is a legal entity that you can create and use for various purposes. The trustee acts as the legal owner of what the trust holds, whilst the beneficiaries may receive all the benefits from what the trust holds. In Estate Planning, Trusts are used to legally avoid estate taxes in various ways. Trust vehicles can also describe how and when assets should be distributed. For example, the settlor (or grantor) of a Trust could instruct that assets be held in Trust for beneficiaries until they attain a certain age or reach a particular life milestone. Like Wills, Trust vehicles can also provide alternative distributions for assets in cases where the beneficiary(ies) pass on without any other qualifying beneficiary. (For example, assets could flow to a charity or educational institution.) A Trust is a very flexible estate planning mechanism. It also allows for the preservation, consolidation of one’s assets as well as ensuring that it remains confidential.
Power of Attorney for Medical Emergency
In the event of medical incapacitation, a Power of Attorney for Medical emergency, sometimes dubbed Care by Proxy, gives an agent or donee the authorization to make medical and health care decisions on behalf of the principal. The principal can also direct the agents on what type of care he desires in the event that he is unable to make such decisions. For instance, if you do not want to be kept alive on a support machine, you can state that the agent makes this decision when the time comes. As a matter of practice, doctors are bound by the oath of their profession and are not legally obliged to share patients’ medical records with anyone – even family members. However, a donee of a Power of Attorney can be allowed access to medical records of the Principal and advice on the best health option. The Agent is then saddled with the responsibility of making medical decisions on behalf of the incapacitated Principal.
Financial Power of Attorney
In signing a durable power of attorney, you immediately give another party (the agent) the power to make financial and legal decisions on your behalf. This document can be customized so that the agent only has power to manage your finances if you become incapacitated and are unable to make informed decisions yourself. The power is granted in a document and is useful not only to you but your family in times of crisis. In other words, it grants someone legal authority to act on your behalf with respect to your financial issues. This may particularly be useful where a person is incapacitated but there is a need to debit the person’s bank accounts for the purpose of effecting payment for that person’s care.
Power of Attorney for Property
A Power of Attorney for Property addresses how you want your assets to be managed and treated. Should you not be able to make decisions by yourself, the party designated to act for you (agent or donee) will be able to make decisions in your best interests regarding your assets. This can include selling your house to pay for medical bills, moving money between accounts, buying/selling investments and related issues as they relate to your assets.
More often than not, families are thrown into confusion in the event of medical emergencies, incapacities, or the death of a breadwinner. The Estate Planning tools stated and explained above can be used independently or in combination.
Whatever estate planning option you choose to adopt, there is a need to engage the services of a professional Estate Planner. With our considerable expertise and experience, ARM Trustees would put your mind at ease. Our excellent services and seamless processes make planning your life and its aftermath easier and gives you assured confidence knowing that your estate’s affairs are in good hands. Contact us here