Estate Planning Solutions

By: Kristen Humphrey-Schulz, Esq. | Associate Attorney

What is an Estate Plan?

With the start of the New Year comes new challenges, resolutions, and a time to re-evaluate aspects of your life.  Perhaps this new year you plan to work on items you may have put off or ignored.  One of those items may be your estate plan.  An estate plan is the collection of legal documents that address the management and disposal of an individual’s assets after their passing.  Those documents may be a last will and testament, a trust, power of attorney, health care power of attorney, living will, and/or transfer on death affidavit, depending on your state of residence. 

A common misconception many of us have heard: I only need an estate plan if I am wealthy, elderly or have children.  These misconceptions are why many individuals ignore or set aside estate planning until a later date, which may prove detrimental to your loved ones upon your passing.  An estate plan is not only for a select group of people, but rather is for anyone at the age of majority who wishes to pass their assets and ease the burden that family members bear when handling a loved one’s estate.  Even if you are young and single with no children, you have assets, and those assets may be subject to probate upon your passing.  An individual or family seeking to begin the estate planning process should first contact a qualified estate planning attorney to discuss their needs.  

Here we will address some of the most common questions we receive regarding estate planning to shed light on the importance of a properly drafted estate plan that effectively conveys your wishes.

Estate Planning Tools 

There are a variety of estate planning tools, however estate planning tools are not one-size fits all, where each document is almost identical for each person.  Rather, an estate plan is comprised of a combination of a few or in some cases many estate planning tools.  Documents such as a power of attorney, a healthcare power of attorney, and living will may augment an estate plan.  In other cases, an estate plan may only consist of a last will and testament and a living trust.  What tools are utilized in each plan are specific to the individual circumstances and wishes of the client.  Discuss your wishes with an estate planning attorney to develop a custom estate plan tailored to those needs. 

Last Will and Testament

Fact or fiction: Does having a will avoid probate of my assets?  We often hear this common question and too often we hear the falsity that a will avoids probate, when in fact, a will is not even designed to avoid probate.  Rather, a will is a legal document that details how an individual desires their property be distributed after death through the probate process.  While this tool is not designed to avoid probate, when drafted properly, a will can be a helpful tool to augment your estate plan.  And understanding what is a will is a vital step towards having a comprehensive estate plan.  

You may then find yourself asking: can I draft my own will?  While there is no legal requirement that an attorney must draft your will, by drafting your own will, you run the risk of costly errors that affect how your assets are distributed to family and friends upon your passing.  Therefore, it is always recommended to seek the advice of an estate planning attorney to have your will drafted.  Naming beneficiaries is an important aspect of a last will and testament along with naming an executor of your estate.  An executor is to be a trusted individual who carries out the terms of the will.  In many cases, individuals will name a close family member as executor or co-executors, such as a spouse, parent, or child 18 years or older.  If an executor is not properly named, the designation of an executor will be determined by the probate court, which may not always align with who you would choose.  

In addition to having a properly drafted will, you cannot overlook the importance of a properly executed will.  In the state of Ohio, a will must be witnessed by two disinterested witnesses.  If this requirement is not met, the will is not valid.  That begs another important question: who are disinterested witnesses?  These are individuals that have no bearing or interest on the designations you made in your drafted will.  Family members are usually interested parties and not appropriate to serve as witnesses.  Ideally seek an outside party such as bankers at your local branch, nurses at the hospital if you are signing a will there, or office staff, to name a few options.  And once you sign your will and it is properly witnessed, it is effective indefinitely, unless you revoke the will or make changes, known as codicils, prior to your passing.  

There’s Usually More to An Estate Plan than a Will 

While the will is an important estate planning tool, it certainly is not the only tool.  Most estate plans utilize a combination of tools to create beneficiary designations.  Further, estate planning tools are not all designed to determine after death distributions, but tools such as a living will, power of attorney, and living trust are utilized during the life of the grantor.  

You’ve likely heard of a living will, if you’ve ever had a hospital visit, you’ll know the hospital almost always asks if you have a living will.  That document is very important to health care workers, as it is a legal document that outlines terminally ill and end-of life healthcare wishes.  Preparing a living will helps your loved ones by alleviating the burden to make critical decisions for you when you are no longer able.  Powers of attorney are other legal documents effective during your lifetime that allow you to appoint an agent to make decisions on your behalf for items such as healthcare and financial items, if you lack the capacity or are unavailable to do so.  

Now what about a trust?  We often receive these questions: do I really need a trust?  And if so, what type of trust?  A trust is a versatile estate planning tool that comes in many forms and can be revocable or irrevocable.  This tool can be utilized to ensure assets in the trust are distributed according to the grantor’s wishes and even provide protection for those assets. Determining whether a trust would be a useful tool to augment your estate plan is to be discussed with an estate planning attorney, as that answer varies based on individual goals, circumstances, and assets.  And when properly drafted, a trust can often avoid probate.  

Reviewing Your Estate Plan

Once you have an estate plan, don’t simply put away your documents and never look at them again.  Updating an estate plan can be just as important as the act of making an estate plan.  Circumstances change throughout life, and changes often call for an estate plan update.   Events such as the birth of a child, a child reaching the age of majority, divorce, or death of a loved one are a few examples that would usually warrant immediate changes to an estate plan.  In general, reviewing an estate plan every five years or so will give you the chance to go over your wishes and see if anything needs updated.  

Updates to an estate plan are often a small change such as an amendment to a living trust, but can also be very consequential, such as revoking a will and having a new one drafted.  Reviewing your estate plan with an estate planning attorney is a critical step of the estate planning process that may be overlooked.  If this step is ignored, the beneficiary designations in place upon your passing may not accurately reflect your wishes.  For example, if you are married at the time your estate plan is crafted and you express in your documents you wish to leave all property to your spouse, and you later divorce but do not update your estate plan, your property may be distributed to an ex-spouse even if that was not your intention.  

Final Thoughts 

Now what if I understand the importance of an estate plan but don’t know where to begin?  If you think estate planning is a daunting task, do not fear, with proper direction, it can be accomplished with minimal stress compared to the potential stress created if you do not have an estate plan.  Contacting a qualified estate planning attorney is the first step.  When you schedule a meeting with an estate planning attorney, it is important to prepare.  Consider your final wishes, account for your assets, make a list of questions, and gather important financial and legal documents to share with your lawyer during the meeting.  And once you have the estate plan in place, you can check off one item on your list of resolutions for the New Year.