Many aspects of estate planning concern maintaining as much control as possible when things get out of control, whether that’s because of an accident, disability or death. It’s called “planning” for a reason. You need to think ahead and prepare for situations that will, or are likely to, happen in the future. It’ll be much better for you and your family to plan on how to handle these events now, before the stress and urgency of an emergency situation make accomplishing things difficult, if not impossible.
If you think estate planning is only for the wealthy, elderly people, or the disabled, you’re mistaken. You should do it before you become elderly or disabled. If you own property or have children you should have an estate plan created.
Some of the tools used in estate planning benefit a wide range of people.
Wills: A will is a legal document in which you can name who gets your property after you pass away. You can also name who you want to be a guardian to care for your children. Without a will and after your debts and taxes are paid your assets will be passed to your next of kin. If that’s not the outcome you want and you want a measure of control over your assets after your death you should have a will created.
- Trusts: This is an arrangement formalized in a legal document in which a person (the settlor) puts aside some assets to be overseen by a trustee in order to benefit a person, group of people or organization (the beneficiaries). The trust can be funded during the settlor’s life or through assets from the person’s estate after his or her death.
- Financial powers of attorney: This legal document allows someone (the principal) to give another person (the agent) the ability to act for him or her. A financial power of attorney gives the agent the ability to handle the principal’s financial matters, often when the principal is in poor health and unwilling or unable to do so. The power of attorney can be very narrow (the agent could use specific accounts to pay bills) or very broad (the agent is given wide powers over the person’s income and assets to address any financial needs).
- Medical powers of attorney: This legal document allows the principal to name an agent to make healthcare decisions in case they’re unable to do so. Healthcare providers must advise and seek permission from the patient/principal first. If the person’s not competent the healthcare agent can be the one making decisions. The document can also spell out instructions to the agent, stating what kind of care is and isn’t wanted.
- Advanced medical directive: This document is similar to a medical power of attorney but it’s only valid if the patient is terminally ill or in a vegetative state.
- Guardianships/conservatorships: If a person becomes incapable of caring for him or herself and has no valid powers of attorney allowing others to make decisions for him or her, a judge, after a hearing, can name a conservator to make financial decisions for the person or a guardian to make healthcare and other decisions about daily life, or both, depending on the degree of disability.
- Tax planning: The federal estate tax is a tax on your right to transfer property at your death. It’s an accounting of everything you own or have certain interests in at the date of death. The fair market value of your property is used to come up with your gross estate. Certain deductions and reductions are allowed to come up with your taxable estate. The filing threshold for a taxable estate in 2018 is $10,000,000, before an adjustment for inflation. Steps could be taken to legally reduce your gross estate so the federal estate tax wouldn’t apply. Virginia has neither an estate tax nor an inheritance tax.
Estate Planning Attorneys
Think ahead and take steps to help yourself and your family members through estate planning. Cravens & Noll helps those living in Central and Western Virginia with their estate planning needs. If you have any questions about estate planning or need to have these services for you or your family schedule an initial consultation today.