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Haugen Moeckel & Bossart

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Estate Planning – What is the State of Affairs? 

Estate Planning is a formalized process that makes it easier to transfer assets to family members upon the death of an individual. Many reasons exist to have estate planning beforehand, such as alleviating the necessity for formal probate, providing direction for minor children's care, and mitigating tax consequences to the estate of a deceased person. 


What is the estate planning process?  


To start the estate planning process, a client meets with an experienced attorney. At that initial meeting, several things will be discussed, for instance, heirs, care of any minor children, and all assets owned by you and your spouse (if any). The way those assets should be distributed, whether Powers of Attorney and Health Care Directives are in place, and the estate's possible tax liability upon the client's death and how to counteract that liability will also be discussed with the attorney.


What is a Will, and what does it do? 


The primary function of a Last Will and Testament ("Will") is to set forth the client's wishes upon their death regarding personal and real property, investments, debts, who should have care and custody of minor children, and who shall act as Personal Representative of the estate. This document is valid until a new Will is prepared, which revokes all previous Wills.


What is a Power of Attorney, and what does it do? 


A General Durable Power of Attorney is a document between the Principal and an Agent (spouse or other individuals) wherein the Principal gives the Agent the power to act on the Principal's part for business purposes only. An example of this would be if a husband were in the hospital and unable to transact business such as writing checks on bank accounts, leasing a property, buying an investment, or other similar acts. Then, his Agent (usually a spouse) would have the authority to execute any documents to enable the Principal's assets to be managed. This document is valid only until revoked in writing by the Principal, or the Principal passes away.


What is a Health Care Directive, and what does it do?


 Like a Durable Power of Attorney, the Health Care Directive (sometimes referred to as a Living Will) gives an Agent the power to make medical decisions for the Principal if the Principal becomes medically incapacitated. A Health Care Directive usually provides for contingent agents in case the primary agent cannot be reached by hospital staff on time. This document can be terminated in writing by the Principal or upon the Principal's death. Often, a Principal will leave with the Health Care Directive his or her wishes under specific circumstances of medical incapacitation. This document does not give the Agent the authority to transact any business for the Principal; only the Durable Power of Attorney can do this.


What else can estate planning accomplish? 


Depending upon the value of the client's assets, estate planning can be used to transfer assets into trusts for tax purposes and to reduce the need for formal probate. In addition, to protect family assets from nursing home claims, it might be necessary to transfer real property through a Quit Claim Deed or Transfer on Death Deed. An experienced attorney will advise the client on the appropriate course of action for the client's particular set of circumstances and situation. 


Why is it essential to have an estate plan in place?


Estate planning can make it easier to protect assets before the death of an individual or to ensure that assets will be distributed following the client's wishes upon his or her death. It can also help ensure that the individual has documents in place to assist the family in making business and health care decisions. 


What does the attorney do during this process? 


The attorney in the estate planning process will meet with the client, review assets and encumbrances, and advise as to what will appropriately meet the client's needs. In addition, the experienced attorney will prepare all documents needed by the client, help execute those documents, and ensure any copies that require property transfers are completed according to state laws. The attorney will then meet with the client regularly to re-evaluate the estate plan and make necessary changes to the program to benefit the client's current situation. Estate planning is an ongoing process and one that necessitates regular communication between the client and the attorney. 

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