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Estate planning is one of the most important steps any person can take to make sure that their final property and health care wishes are honored and that loved ones are provided for in their absence. Though often overlooked or put off in favor of more immediate concerns, a comprehensive estate plan can resolve a number of legal questions that arise whenever anyone dies.
Everyone needs estate planning. Estate planning is just as important for younger adults as it is for older people. An estate plan ensures that personal wishes are honored. Given its importance, the plan should change with each significant family event such as births, marriages, divorces, deaths and home purchases. At minimum, a proper plan should incorporate a Last Will and Testament, guardianship for minor children, consideration for beneficiaries with special needs, insurance, investments, durable powers of attorney, and healthcare directives. A well-drafted estate plan saves tax, court, and attorney costs.
Understanding the estate plan options that are right for you can be a complex undertaking. The management and transfer of property without estate planning documents can end up with the wrong person managing your assets and possibly your assets being distributed to beneficiaries you did not choose. An effective estate plan should be customized to your needs, rather than offered as a one-size-fits-all solution. Michael Sullivan & Associates can help you identify your estate planning needs, recognize potential solutions and work with you throughout every step of the estate planning process. Our team will take time to understand your needs. We are experienced in the legal mechanics required to draft your estate plan, help you avoid probate, carry out your wishes and protect your assets.
Regardless of your age, or the size and complexity of your estate, an estate plan can accomplish the following:
It is critical to make sure that your estate planning documents are prepared and implemented correctly.
You have worked hard to build your estate and a properly written Will ensures that your wishes are respected concerning its distribution.
A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to property held for another person called a “beneficiary.” The rules or instructions under which the trustee operates are set forth in the trust document. Trusts sometimes have one set of beneficiaries during the life of the grantor (the person who creates the trust) and a second set — often the grantor’s children — who begin to benefit only after the first group has died.
There can be several advantages to establishing a trust. One primary advantage is to avoid probate. Trusts fall into two basic categories: testamentary or inter vivos. A testamentary trust is one created by your Will. It does not come into existence until the testator (the person whose Will it is) dies. An inter vivos trust is one created and in effect during the grantor’s lifetime.
There are two kinds of inter vivos trusts: revocable and irrevocable. In a revocable trust, at the death of the grantor, any property remaining in the trust at the grantor’s death generally passes immediately to the beneficiaries after payment of debts and taxes, pursuant to the terms of the trust without requiring probate. This can save time and money for the beneficiaries.
Certain trusts can also result in tax advantages both for the grantor and the beneficiary. These are often referred to as “credit shelter,” “life insurance” or Crummey trusts. Other trusts may be used to protect property from creditors or to help the grantor qualify for Medicaid. Unlike Wills, trusts are private documents and usually only those individuals with a direct interest in the trust need to know of the trust assets and its distribution. Provided they are well-drafted, another advantage of a trust is that it remains effective if the grantor dies or becomes incapacitated.
A Power of Attorney (POA) is one of the most important estate planning devices available. A POA allows the person you appoint to act in your stead for financial purposes as soon as it is executed. It is particularly useful when, and if, you ever become incapacitated. The person you appoint to exercise the power of attorney will be able to step in and take care of your financial affairs. Without a POA, no one can represent you with regard to your financial affairs unless a court appoints a guardian. This court process takes time, costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship, your representative may need to seek court permission to initiate planning measures that he could implement immediately with the use of a simple Durable POA.
A POA may be limited or general. A limited POA gives the person you’ve appointed specific powers. For example, you can give an individual the right to sign checks on your behalf. A general POA is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself. A Power of Attorney may also be either current or “springing.” Most POAs take effect immediately upon their execution, even if the understanding is that they will not be used until, and unless, the principal (person who is signing the POA) becomes incapacitated. However, the document can also be drafted so that it does not become effective until mental incapacity occurs. In such cases, it is very important that the standard for determining incapacity and triggering the POA be clearly articulated in the document itself.
Any complete estate plans should include a medical directive. In our current world, the COVID-19 health crisis has made this painfully clear. A Health Care Directive is a legal document in which a person specifies what actions should be taken for their health if they are no longer able to make decisions for themselves because of illness or incapacity.
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In alignment with its philosophy of quickly and effectively resolving cases, Michael Sullivan & Associates established an Estates, Wills, & Trusts Unit. The members of this unit are committed to provide comprehensive solutions for your needs.
MS&A's targeted approach has proven to be very effective and popular with clients, and has produced a high volume of referrals as well as increase client satisfaction.