BASIC ESTATE PLANNING

Everyone knows that Estate Planning is important but not everyone confronts it in a timely manner. Some have an out-dated Estate Plan written prior to changes in the law or prior to major life's events such as the birth of a child, a marriage, a divorce, a separation, a death or a significant appreciation of assets. Others never got around to it in the first place. If Estate Planning is so important, why do people procrastinate? Some find it gloomy to plan for death or incapacity. Others find it confusing. With all the information available, this isn't surprising. The purpose of this article is to provide straightforward information about the Basic Estate Plan and a simple no-nonsense explanation of the risks involved with not having an updated Estate Plan.

A Basic Estate Plan includes:

1. Will

A Will is a legal document in which you identify people or charities (beneficiaries) to receive your property after your death. The Will also names an Executor to administer your estate. The Executor manages your property affairs and is responsible to ensure that your property is distributed as provided in the Will. The Will may also name guardians for your minor children until age eighteen.

2. Durable Power of Attorney (also known as Durable Power of Attorney for Financial Matters)

This document grants one or more people the power to manage your financial affairs if you become unable to do so or if you want a person to handle these things for you. By executing this document, your agent would have the legal power to make binding decisions that affect your money, property, and other assets, including paying your bills and spending your money. If someone becomes incapacitated without a power of attorney, it may be necessary to obtain a court supervised-guardian to manage your financial affairs.

If you want your agent only to have power over your financial affairs in case of a specific event (such as incapacity), then you ask for a 'springing power of attorney.' In other words the power 'springs' (arises) from that specific event.

3. Advanced Directives (in New York)

What happens if, due to illness, you suddenly become unable to speak or communicate with your family or health care provider? Maybe you always told your family 'don't keep me alive by a machine if my illness is so severe that I won't recover.' In New York, without executed Advanced Directives, your doctor may not be able to honor such a decision.

There are four documents that may be executed to empower a trusted person to carry out your wishes in such a case:

A Health Care Proxy - This document appoints a healthcare agent - a person you trust to make your health care decisions for you if you are unable to make the decisions for yourself. Without a Health Care Proxy, a family member may know exactly what you wanted but the hospital and doctor is, in some circumstances, won't be allowed by law to listen to that person without a properly executed health care proxy.

A Living Will - This document contains written instructions that explain your health care wishes, especially about end-of-life care. You cannot use a Living Will to name a health care agent; you must use a Health Care Proxy.

A Living Will together with a Health Care Proxy - This document has your written instructions AND empowers a trusted individual to carry out your health care wishes.

A Do Not Resuscitate Order (DNR) - This document only lets you express your wish to do without cardiopulmonary resuscitation (CPR) (emergency treatment to restart your heart and lungs if your heartbeat or breathing stops.

** More detailed information on Advanced Directives in New York is provided at www.oag.state.ny.us/health/EOLGUIDE012605.pdf

The Dangers of Not Having a Basic Estate Plan:

Dying without a Will:

Without a Will, your assets pass to 'distributees' according to laws of intestacy. Your family members, perhaps the one's you would not choose, each receive a per cent of your assets in accordance with state law. Maybe the family member you would have chosen will receive nothing - maybe the family member you would not have chosen receives most of your wealth.

Sometimes not having a Will adds additional expenses to the administration of your estate. In some circumstances, the additional costs are significant.

Maybe, your child's spouse could wind up with your wealth if your child dies prematurely. If your child divorces, half of the assets could go to the spouse. With a Will, you can ensure that your assets stay in the family (ie. Pass to trust for your grandchildren).

If your children are under 18 and both parents die, the court would decide who raises your children. A Will enables you to determine the guardian in advance.

If your child has special needs, s/he risks being disqualified from receiving Medicaid or SSI benefits unless the money passes correctly. A special needs child may be required to use any inheritance to pay for care. With a Will, you can establish a special needs trust that will allow the child to remain eligible for government benefits while using the trust assets to pay for non-covered expenses.

Loss of Capacity:
Without a plan, the court will select a person to manage your financial and medical decision if you become incapacitated. With a durable power of attorney and Advance Directives, you can choose that person.

A few questions to consider first:

1. Executor.

Who are your first, second and third choices to act as executor of your Will. Your executor is responsible for collecting your property after death; administering your estate, opening a probate case, if required, distributing property to your beneficiaries, completing your last tax return and paying any taxes and other debts of your estate from your probate assets.

2. Trustees.
If your Will creates trusts for the benefit of your beneficiaries, you should consider your first, second and third choices for your Trustee. The trustee will be responsible for investing and managing the trust property.

3. Guardian.

If your children are under the age 18, they who are your choices to be guardians of your children?

4. HealthCare.

If you cannot make your own healthcare decisions, who will have this power to act on your behalf?

5. Property Management.

If you are unable to manage your financial affairs, who will have this power to act on your behalf? Remember, that person will have the power to spend your money. Should they only have this power if certain circumstances occur?

6. Beneficiary Designations.

Who should receive the proceeds of your life insurance policies, IRA's, and your retirement plans? Are these designations up to date?

IMPORTANT PAPERS to be kept in safe, secure place.

• Complete list of valuable assets and liabilities
• Deed to your home (and deeds to investment properties)
• Mortgage to home (and notes payable on investment properties)
• Copies of passports
• Birth and death certificates
• Marriage certificate (& Divorce decree, if applicable).
• Adoption papers
• Citizenship papers
• Military records
• Recent bank and brokerage statements (including user identification numbers and passwords to online financial accounts)
• Notes or other debts due you
• Copies of stock certificates
• Title to any vehicle, lease or loan information
• Insurance policies and agent contact information
• Credit / Debit cards (copy both front and back)
• Inventory list of major household items
• Tax returns for past three years and contact information for accountant
• The location of original wills, codicils, prenuptial agreements, trusts, powers of attorney and safe deposit boxes.
  Don't keep a Will in a safe deposit box - it may require your Executor to get a Court Order to access the Will slowing down the Estate administration process
• Names and contact information for all personal representatives, trustees and guardians. atives, trustees and guardians.