An Estate Plan Is Far More Than A Will

October 29, 2012 | Posted by Ken Eisner | No Comments

Estate_planOften, when I ask my clients about their estate plan, they inform me that they have a will. They are surprised when I inform them that an estate plan is far more than a will. To appreciate what is involved in estate planning, one needs to understand that upon one’s death, assets transfer in three ways:

    1. Operation of Law – assets that are owned jointly for the most part transfer to the other joint owner, regardless of what is set forth in your will;
    2. By Contract – life insurance policies, profit sharing plans, annuities, and other investment vehicles require a beneficiary designation. Again, regardless of what your will provides, the proceeds from these investment vehicles go to the named beneficiaries; and
    3. Probate – if you have a will, then probate occurs through the will. If you do not have a will, then your assets will transfer pursuant to the intestacy laws, which are laws established by the state to set forth how your assets shall be distributed.

It is important to ensure that all of the mechanisms work together and are consistent with each other. Too often, people spend significant amounts of time determining the manner in which they want the distribution of assets made to their beneficiaries in their wills and then only take two minutes to decide who will be the beneficiaries under the investment vehicles that are transferred by contract as described above.

Additionally, an estate plan includes Financial Powers of Attorney. There are a few types. One type is a power of attorney that goes into effect immediately and another type is one that does not go into effect until you are determined to be incompetent, in other words, incapable of making rational decisions. There are obviously many variations of both of these types.

A Health Care Declaration gives a person the authority to make decisions regarding your health care, such as consenting to medical treatment, should you become unable to make such decisions on your own behalf.

The Living Will declaration expresses your desire to receive or refuse life sustaining treatment when you have been determined to be in a terminable condition or complete vegetative state. Your agent only has the power to act if you lack the capacity to make or communicate a decision.

In addition to these documents, it is becoming more and more popular for people to decide how they want their bodies to be treated upon death. I often prepare documents setting forth instructions for cremation and even more recently, burials. In that regard, Pennsylvania recently opened its first green burial only cemetery, Penn Forest Natural Burial Park, just outside of Pittsburgh. Green burial is a method that supports the earth’s ecosystem instead of damaging it as traditional methods do. In green burial, no toxic chemical embalming fluids are used, caskets, if used at all, are made of biodegradable materials. The body is buried close to the ground’s surface, so it nourishes plant growth as it decomposes. To learn more about Penn Forest Natural Burial Park, visit pennforestcemetery.com.

If you have not addressed all of your estate planning needs, including ensuring that all beneficiary designations are accurate, please contact your estate planning lawyer as soon as possible. Don’t wait until it is too late!

 

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Category : Estate Planning

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