Estate planning is important no matter what your stage in life happens to be. Whether you are young and single, married with children, approaching retirement age or in retirement, you need to have at least a basic estate plan in place. You need to protect your assets and make sure your wishes are carried through in the event you cannot speak for yourself.
The Basic Estate Plan
The basic estate plan consists of a will, a power of attorney and a health care directive (sometimes called a living will). Other advanced estate planning tools exist, including trusts, however the focus of this article will be the basic estate plan. If you are interested in trusts, contact an attorney to discuss whether it would be beneficial for you to have such an instrument.
The Will The will is one of the most important documents in the basic estate plan. If you pass away without a will, the State of Minnesota decides how to divide your assets, and your wishes are not taken into account. In your will, you designate which of your assets go to whom, including personal property, real estate (subject to certain limitations) and cash. You can designate family, friends, organizations and charities to take certain assets under your will. Other important choices made in your will is who to designate as the Personal Representative of your estate. Your Personal Representative will distribute and administer your estate, and handle a court proceeding called probate, should it be necessary (see below).
The Power of Attorney The power of attorney is another important tool in the basic estate plan. In the power of attorney, you can designate who you want to dispose of your property, deal with investments, borrow money, create trusts and handle other important functions when you are unable to do so yourself, during your lifetime. If you do not have a power of attorney in place, your wishes may not be carried out to fruition.
The Health Care Directive The health care directive is the third document that needs to be included in the basic estate plan. Should you become incapacitated and not be able to speak on your own behalf, the health care directive dictates who is empowered to make important decisions regarding your health care. You may also direct medical personnel what to do in the event you are in terminal condition and cannot express your wishes. You can also designate whether you wish to donate your organs after death.
Probate Probate is the court process through which your will is verified, estate assets are distributed and creditors are paid. Depending upon the size of your estate and whether anyone challenges the validity of your will, the probate process may be short or very lengthy. According to the American Bar Association, the average probate lasts between six and nine months. Sometimes, people utilize trusts in an attempt to avoid the probate process. With a trust, your assets are transferred out of your name and the trust becomes the owner. Other ways of avoiding probate include joint ownership of real property, payable on death bank accounts and beneficiary designations on investments.
Conclusion Estate planning is something that you should consider engaging in as soon as possible. Although there are some simple ways to secure a basic estate plan, if you have any further questions, there are many qualified attorneys in the Twin Cities area who are available to assist you.
Andrew S. Miller is an attorney based in the Minneapolis-St. Paul Twin Cities area. He practices in the areas of estate planning, probate and general practice law. Please contact him with any questions about this article.
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