How Estate Planning Works

A model home next to a key

Talking about estate planning can be a scary proposition. The phrase Estate Planning covers a lot of different bases, from the most bare bones Will to the most fully kitted out Trust. Many people frequently put this very important duty off as long as possible. Unfortunately, this sets themselves, and their loved ones up for catastrophic failure. There are many points where estate planning comes into effect, even before the passing of an individual. Not planning for these (and other) eventualities is a selfish (and avoidable) mistake. Understanding how estate planning works is a key step in making the right choice for you and your loved ones today!

What Starts Today?

If you were to sign a comprehensive estate plan today, what would start working right now? Any incapacity planning documents (such as a Power of Attorney or a HIPPA release) would take effect immediately. You should take these to your doctor’s office and have them put on file with your paperwork, just in case.

If you got a Trust, this would also go into effect immediately. A Trust is a legal entity that can hold onto assets in the name of one or more individuals. Essentially, it becomes a business who’s entire goal is to protect your assets from probate court. A Trust can (and should) hold onto major assets like homes, vehicles, and larger bank accounts and businesses.

What Happens Later?

The first document that usually kicks in is a Power of Attorney. While this is always at the ready, it really goes into effect when you are incapacitated. Once this happens, the individual you name in the document is able to make decisions for you. This includes both medical, and financial choices. A trust that is set up for your benefit can also work in the same way, allowing a secondary person to access your information should you be unable to do so.

What Happens After I’m Gone?

Once the individual who the documents were drafted for have passed, the power of the documents shifts. The Power of Attorney documentation ceases to work entirely, as does the HIPPA release. In their place, the Will and Trust kick in. If a Trust was made, and all of the initial trustees (the owners of the Trust) have passed away, the Trust becomes irrevocable, and the instructions set out within must be followed. If there is no Trust, but there is a Will, it becomes the overriding document.

A Will serves as a guide through Probate Court. Anything not assigned to a Trust will have to pass through Probate Court before going to a loved one.

Estate Planning is a large, intimidating and encompassing phrase that covers a lot of bases. Understanding how estate planning works can be difficult, particularly because each plan should be customized to each family’s situation. When setting your plan up with your estate planning attorney, be sure to ask about the particulars about your planning and communicate that information to anyone mentioned in your documents. If you have any questions about your own planning, please reach out today. You can either click here, or call our offices at 419-352-7522.

Categories: Estate Planning