Estate Planning Terms to Know
May 2, 2022
A recent Caring.com survey reveals that only 42% of adults in the U.S. currently have estate planning documents such as a will or living trust. Hesitancy surrounds estate planning because people just don’t feel comfortable addressing end-of-life matters. Still more people, when they hear the term “estate planning,” equate it with rich people who live behind gates and drive luxury cars.
Estate planning, in real terms, is not just about preparing to take care of your loved ones when you’re gone, but also about preparing for life’s unexpected events that may happen to you. Think health care: What happens if you’re suddenly incapacitated in a hospital bed and can’t personally agree or disagree with medical decisions being made? Likewise, if you’re incapacitated and unable to manage your financial affairs, who can do that for you?
These are all legitimate reasons to begin estate planning. Even if you already have a will but haven’t examined other legal options to complete a comprehensive review of the future of you and your loved ones, you should take that will to an experienced estate planning attorney and undertake a review of your life situation. Remember, there is no “one size fits all” solution to estate planning. Each person and each family is unique, with differing needs and challenges.
If you wish to begin your estate planning or review what you already have, contact William E. Morgan, Attorney at Law. William E. Morgan has been helping clients with all their estate planning needs for over 20 years and stands ready to help you and your family achieve peace of mind knowing that the future is being accounted for.
From his office in Montesano, he proudly serves clients in Grays Harbor County, Washington, including the areas of Aberdeen, Hoquiam, and the Pacific County cities of Raymond and South Bend.
Why Estate Planning?
The popular conception of estate planning is to decide who among your family members, heirs, and loved ones gets what when you pass away. Though that is certainly an essential function of estate planning – without it, the state can decide for you – comprehensive estate planning also takes into consideration unforeseen events that can throw everyone into disarray, including you.
For instance, as mentioned above, if you become incapacitated, your family may have to decide on medical treatment options for you. You can create a living will that states your treatment choices to spare your loved ones from having to decide what you would prefer.
You can also create a living trust or durable power of attorney for a family member, friend, or associate to assume direction of your financial affairs should you be incapacitated.
Important Terms to Know
Estate: Your estate is everything you own by yourself. Anything held in partnership with others, such as a primary residence with tenants in common (typically a married couple), will transfer automatically to the other titleholder. Also, insurance policies and retirement plans with named beneficiaries will go directly to them, and no will or trust is needed. Everything else, from cars in your name, art collections, family heirlooms – everything of value – becomes your estate.
Will: A will is an instrument by which you designate beneficiaries for your estate. You also name a personal representative to carry out your wishes in probate court. Wills have to be supervised by a probate judge.
Living Trust: A living trust does much of what a will does, but it does not have to go through probate court, which can save your beneficiaries months of court proceedings and added legal costs. In a trust, you name a successor trustee to supervisor the distribution of your assets. You remain the primary trustee while alive and not incapacitated, making all decisions for yourself. Your successor takes over should you become incapacitated or pass away.
Beneficiaries: Beneficiaries are those you name in your will or living trust to receive your assets according to your instructions.
Intestate: This means to die without a will. Your estate is then administered directly by the probate court, which will name an executor to carry out the division and distribution of assets. Beneficiaries will be chosen according to the state’s laws of intestacy.
Probate: Probate is a legal proceeding for those who die without a will (intestate) or with a will. A judge will supervise the process of paying off debts, collecting and managing assets, and finally distributing assets to beneficiaries.
Executor: The personal representative named in a will is redubbed the executor of the estate during probate proceedings. If there is no will, the court will appoint an executor, usually a family member.
Power of Attorney: A power of attorney (POA) grants someone you name the authority to manage your financial affairs. This authority can be limited by time or event, for instance, only while you’re on deployment. If you execute a durable POA, then the agent you name will be able to manage your finances while you’re incapacitated. Without the durable clause, the POA automatically ceases when you become incapacitated. In both cases, the POA expires once you die, and you can also withdraw it at any time so long as you are not incapacitated.
Advance Healthcare Directive: This instrument combines a living will, in which you specify the treatments you will and won’t accept if you’re incapacitated, along with a power of attorney naming someone (family, friend, associate) to voice the decisions made in your living will to your attending medical providers.
Guardianship: If you have minor children, you will need to name a guardian for them to prevent the court from doing so. The only instrument recognized for naming a guardian is a will, not a trust.
Business Succession: If you own, co-own, or partner in a business, you should plan for how you can pass along your share of the business to your family should you become incapacitated or pass away. This involves naming a successor to take over your role and share in the business or to provide for the sale or transfer of your ownership rights.
Skilled Estate Planning Guidance
As you can see, legal options and considerations for the sake of both your family and yourself abound when carrying out estate planning. That’s why you need to conduct your planning with an experienced estate planning attorney who can walk you through all the options and explain what each one will accomplish for you.
The attorney can then draft ironclad legal instruments that will minimize and help eliminate the chance of challenges or confusion down the road.
For all your estate planning needs in or nearby Grays Harbor County and Pacific County, Washington, rely on William E. Morgan, Attorney at Law.