If you're interested in creating an estate plan, you may be wondering what an estate planning lawyer does and if you need one to assist you. Estate planning lawyers are able to help you create a plan that will allow you to determine how your assets will be divided following your death. These legal professionals can also help you establish documents that determine how choices will be made regarding things like your medical care or finances if you are not able to make these decisions on your own.
Should you already have estate planning documents, an attorney could also help you review these documents from time to time and ensure that they are appropriate for your current situation. The change of a job, getting married or divorced and the birth and death of individuals may lead to the need for a change in your estate plan.
Creating an Asset Distribution Plan
Determining how to distribute one's assets upon their death is one of the most common reasons that people seek the assistance of estate planning attorneys. There are a number of reasons why you may benefit from a lawyer's guidance in these matters. Estate planning attorneys have a comprehensive knowledge of current state and federal estate planning laws, can help to reduce your heirs' tax obligations and are able to create an estate plan that fits your specific situation and needs.
To help develop your estate plan, an attorney will probably want to know about your wishes and the people whom you intend to leave your assets to. An attorney will also probably want to know about your current financial situation, so it's a good idea to provide financial documents as well as any life insurance policies and retirement plan documents.
Wills and Trusts
Wills and trusts are the documents that are normally used to help people name who will get their property once they pass on. Many individuals may assume that they only need a will, but wills often do little to protect heirs from taxes, and you are limited in the ways that you can leave your assets to your heirs in a will.
Further, even though these documents are still an important part of an estate plan, there are a variety of things that a will cannot do. Wills allow you to leave assets to individuals as well as name people to take care of minor children. However, if you want to be able to pay out assets over time or based on certain circumstances, you'll need to set up a trust.
It's also important to note that anything left to someone in a will has to go through probate, which can delay your heirs from having immediate access to any property or funds you leave them. Additionally, wills only allow you to leave people a lump sum of money that is paid out immediately.
How assets are assigned to people can have a significant effect on their lives and ability to obtain certain types of assistance. For example, if a person is on disability and is left a large sum of money in a will, it may prevent them from being able to obtain benefits in the future. Therefore, an attorney may want to determine both your situation and the situation of the people whom you are leaving assets to when helping you develop an estate plan.
While wills are fairly limited, there are a variety of types of trusts that an attorney can draft for you, and trusts can allow your heirs to avoid probate. Revocable trusts are a popular option because they allow you to continue to manage assets while you are alive, but their management will automatically transfer to another individual when you pass away or cannot manage the trust on your own.
Along with trusts, an estate planning attorney may also be able to help you determine how to use gifts to reduce the amount of taxes on your estate. Each year, you are allowed to gift a certain amount to an individual without requiring you or the person receiving the gift to pay taxes on it. These gifts can help you reduce or eliminate the state or federal taxes on an inheritance while allowing you to pass on the same total amount of assets.
Drafting Powers of Attorney
Powers of attorney are normally used to name a trusted individual to make either financial or medical choices for you. These documents can be set up to either activate when you are incapacitated or cannot make choices on your own for whatever reason.
Along with a medical power of attorney, you may also want to look into setting up a living will and HIPAA authorization forms, which allow named individuals to be informed about your medical condition and have access to your medical records. If you do not create a HIPAA authorization that names the person who has a medical power of attorney for you, the information that medical professionals can share with them may be limited.
A living will determines how you want to be cared for, and a medical power of attorney provides a named individual the ability to make choices about what type of treatment you receive. For example, this individual may determine how long you should stay on life support or if your records should include a do not resuscitate order.
Another type of power of attorney that an estate planning attorney can help you set up is one that allows a person to make financial decisions in your stead. In addition to allowing someone to make choices about your finances when you are mentally incapacitated, these documents can be set up to allow a person to manage your finances when you are simply unavailable, such as being out of the country.
Whether you are interested in creating an estate plan from scratch or verifying that your current plan is appropriate, an estate planning attorney can provide guidance that will benefit you and your heirs.