Why It’s Important to Plan Your Estate + the Arizona Estate Planners You Need on Your Team
By Jim Davidson, Community Development Officer
“The ideal estate plan protects and supports what matters most. To assist families in achieving their hopes and dreams, we encourage them to ‘live their legacy’ in addition to leaving one. Hence, estate planning is a balancing act of stories, traditions, and legal structures that together, help to curate and transfer the very best from one generation to the next.” -Avi Kantor, The Certior Group
Let’s face it: we all should have an estate plan. As soon as you’re a legal adult, you should start an estate plan and update it every 5 years or so. And as we consider providing long-term care for an aging parent or loved one, the need for an estate plan can become even more clear.
Over 65 million Americans—about 30% of the population—provide care for someone over the age of 65 as they require more and more support. So, when you’re helping to care for your parents or other elderly loved ones, it’s important to make sure they have an estate plan in place. It protects everyone involved, ensures your loved one’s wishes are met, and can help eliminate (or at least minimize) family drama down the road.
However, when you hear “estate plan” it may sound a bit complicated and hard to do. In this post, we’re going to break down just what should be included in an estate plan, plus the key players you should make sure to have on your team as you’re putting together an estate plan in Arizona.
What is an Estate Plan?
An estate plan is an extensive plan that explains how you want to pass down your assets. It lists your wishes and specifies exactly who will oversee those wishes and act on them in your absence—or when you can no longer take care of things yourself.
George Milman, Esq. at Milman & Associates, said “A properly designed estate plan should meet the desires of the client to transfer wealth in the most appropriate way. Reduced estate tax, efficient transfer of assets and avoiding probate expenses are a few benefits of a properly designed estate plan.”
The best estate plans are designed to steer clear of probate, minimize estate taxes, safeguard assets if you need to move into an assisted living situation, and appoint someone to act for you if you become disabled.
All of these benefits make estate planning incredibly important for your loved ones.
What Does an Estate Plan Include?
At the bare minimum, an estate plan requires a will and a durable power of attorney. But for the best estate plans, there are 5 key elements:
Will: A will is a legal document that spells out your wishes regarding the care of your children as well as the distribution of your assets after your death.
Trusts: A trust is another method of estate and asset transfer that is established to provide legal protection for the trustor’s assets.
Power of Attorney: This is a legal document that gives someone the authority to act for another person in specified or all legal, financial, or health matters.
Healthcare Directives: A healthcare or medical directive allows you to plan your medical treatment in advance should there ever come a time when you are unable to express your personal healthcare wishes.
Beneficiaries: A beneficiary is the person or entity you name in a trust or life insurance policy to receive the death benefit.
There are a lot of documents that come along with those 5 key elements. Let’s take a closer look at what all of these documents are used for and why they’re so important. We also suggest who you will need to seek professionally to help ensure you have everything in order.
What Documents Do I Need in an Estate Plan?
The basic documents you will need include a will, trust, and power of attorney.
A will is the most common document people think of when setting their affairs in order. As we said before, it details where you want your assets to go at your death, and who you would like to serve as guardian of your minor children (if you have them).
If you or your parents have a will in place, you’re off to a good start. But having only a will has drawbacks. It can mean longer probate processes and higher taxes when the time comes to read the will and begin distributing assets.
A trust is put in place to protect your assets and hold those assets on behalf of a beneficiary. It can save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes.
There are many different types of trusts: revocable trusts, irrevocable trusts, living trusts, etc. It can get tricky when deciding which trust is best for you—which is why it is important to find a professional to help you determine which trust to use and to help you set it up correctly.
A Power of Attorney is where you designate a person to make decisions about your property, finances, or medical care in a situation where you are unable to make those decisions yourself. Usually, there is a power of attorney allocated for health decisions and another one for financial decisions, but while they are separate documents, the same person can be designated for both.
All of these documents are incredibly important, and the best way to make sure you have them done correctly is by enlisting professional help.
Which Professionals Do I Need To Create an Estate Plan in Arizona?
When you’re working on an estate plan, either for yourself or when helping your parent or elderly loved one through the process, assemble an advisory team that includes an estate planning lawyer, a wealth or financial advisor, a healthcare provider or doctor, and an insurance professional.
Estate Planning Lawyers: Often known as probate attorneys, these professionals can help you with necessary legal documents, trust set up, and strategies for dealing with probate and estate taxes.
Wealth Advisors: These professionals are there to make sure you are properly managing your assets and prepared for the future. They typically offer financial planning, tax strategy, investment management, and retirement planning.
Healthcare Providers and Doctors: Getting consistent checkups helps you remain aware of any upcoming health concerns that could become chronic, and having a consistent team of healthcare providers makes it easier for them to work together to optimize your care and health.
Long-term Care / Insurance Professional: Navigating aging support services and long-term care can be daunting. As you’re considering your estate planning in Arizona, All Valley Premium Private Care & Home Health Care can provide insight into long-term care strategies for in-home care and suggest insurance professionals to consult with for policies. As Dwight Spence of Spence Cassidy & Associates said, ”Long-term Care insurance planning is a critical component of a proper estate plan. In many cases it protects assets and avoids excessive depletion of the estate when properly designed.”
With the right resources and advisors in place, putting together an estate plan can be simple and effective. As you’re planning for yourself or helping a loved one, make sure there is an estate plan in place as a step toward living in peace, security, and satisfaction.