As the 2009 calendar year ends and the 2010 calendar year begins, Americans love to use this time of year to make various resolutions. These resolutions usually include exercising so many times a week and trying to quit smoking. In 2010, you should consider making the following seven New Year’s resolutions for your estate plan.
(1) Execute a living will or review your current living will.
A living will is your written statement that you do not want your life to be prolonged artificially by the use of life support. Under a living will, life support can only be withheld or withdrawn if you are in the final stages of a terminal illness or if you are in a permanently unconscious state as determined by two physicians. Even if you have executed a living will, you should review it to confirm that the individuals listed in the living will are the individuals you want to receive the required notice and also to make sure that their addresses and phone numbers are current.
(2) Execute a durable power of attorney for healthcare or review your durable power of attorney for healthcare.
This is a legal document in which you designate an agent to make healthcare decisions for you in the event you become unable to make those decisions for yourself. Even if you have executed a durable power of attorney for healthcare, you should review it to confirm that the individuals named are those whom you would want to make your healthcare decisions in the event you are unable to do so and that their addresses and phone numbers are current.
(3) Execute a durable power of attorney for property or review your durable power of attorney for property.
A durable power of attorney for property is a legal document in which you designate an agent, with one or more successors, to handle your financial affairs. This is one of the most important, if not the most most important legal documents you should have. A power of attorney is “durable” if it expressly states that it survives your incompetency. Even if you have executed a durable power of attorney for property, you should review it to confirm that the individuals named are those whom you would want to make financial decisions for you and that their addresses and phone numbers are current.
(4) Execute a healthcare authorization or review your healthcare authorization.
A healthcare authorization allows you to designate individuals to receive and review your healthcare information. Even if you have executed a healthcare authorization, you should review it to confirm that the individuals named are those whom you would allow to view healthcare information and that their addresses and phone numbers are current.
(5) Execute a funeral designation form or review your funeral designation form.
A funeral designation form is a legal document in which you designate an individual to communicate with the funeral director regarding your funeral arrangements after you have passed away. Even if you have executed a funeral designation form, you should review it to confirm that the individuals named are those whom you would want to make funeral arrangements and that their addresses and phone numbers are current.
(6) Execute a will or review your will.
A will is a document which directs the disposition of property owned by you at your death. In order to be effective, a will must be signed by the individual in the presence of at least two adult disinterested witnesses. A will can only direct the disposition of probate property, which is property actually owned by the decedent and held in his or her sole name at the time of his or her death. Wills do not control the disposition of non-probate property, which includes property titled in joint names with right of survivorship, life insurance proceeds, IRAs, and pension or profit sharing benefits, unless any of these are payable to the individual’s estate.
The will names an executor, who has a duty to ensure that the various legal requirements are met and for paying creditors, any federal or estate taxes, and administration expenses. The executor is also responsible then for collecting and distributing the property as directed by your will. In your will, you may also name a guardian for the person and estate of your minor children.
If you do not have a will, state law will dictate who receives your property. Therefore, it is important that you have a will. If you do have a will, then it is important that you review all of the various provisions of the will and all of the individuals named in the will who have fiduciary responsibilities and make sure that your wishes as listed in the will are current.
(7) Execute a trust or review your trust.
If you do not have a trust, you should contact an estate planning attorney to determine whether or not a trust would benefit your estate plan. If you do have a trust, you should take this time to review this trust.
Like a will, a trust is a legal document which provides for the administration or distribution of your property following your death. The most popular type of trust is an inter vivos trust, which is commonly referred to as the “living trust.” A living trust resembles a will, but it also provides for the management of your assets during your lifetime, and could negate the need for a guardianship should you become incompetent. In many living trusts, the creator of the trust is also the trustee. When you create a revocable living trust, you do not give up control over the property which you place in the trust, since you can replace the trustee at any time.
Living trusts offer three advantages. First, assets in a living trust do not pass through probate, which can be (but is not always) a time-consuming and expensive process. Secondly, the living trust provides for the management of your assets in the event of your disability or incompetence. The third advantage is confidentiality. A will is a public document which can be examined by anyone. A living trust is not open to public inspection.
Even if you have a living trust, you should still have a will. If you do have a trust, then it is important that you review all of the various provisions of the trust and all of the individuals named in the trust who have fiduciary responsibilities and make sure that your wishes as listed in the trust are current.
In conclusion, use the calendar year 2010 to accomplish your seven New Year’s resolutions for your estate plan. Happy New Year to Everyone!
NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.