Frequently Asked Questions about Estate Planning

What is a Durable Power of Attorney?

A power of attorney is a document you sign while competent that authorizes another person to act on your behalf. A Durable Power of Attorney allows that person, known as your agent, to act even if you later become incapacitated. A durable power can take effect when you sign it or after some triggering event, such as when two physicians confirm that you are not capable of handling your affairs.

Be sure to name someone you absolutely trust to follow your wishes and handle your finances honestly.

What can an agent do?

Your agent may be able to sign legal documents in your place, buy and sell real estate for you, pay your bills, and take other financial actions on your behalf, depending on what you specify in the document.

What about health care decisions?

State law allows you to create a durable Health Care Surrogate Designation that gives your agent the authority to make health care decisions for you if and when you are unable to make them.

How is a health care surrogate designation different from a living will?

A living will tells doctors your wishes regarding administering life-sustaining procedures or non-orally ingested nutrition and hydration if you have a terminal illness, an end-stage disease, or if you are in a persistent vegetative state. You may direct that such procedures be withheld or withdrawn, or you may direct that they be used to sustain your life. You also may appoint an agent to make most decisions related to your health care if you are unable to.

What if I become incapacitated without having executed powers of attorney or a health care surrogate designation?

If you are no longer able to manage your property or care for yourself, and you have not signed a power of attorney or named a health care agent, any interested individual (for example, a family member, agency, or health care provider) may petition the court to appoint a guardian to act on your behalf. The guardian will be responsible for managing your financial assets and also may be responsible for decisions related to your care. A single individual may serve as both guardian of the estate and person, or the court may appoint separate individuals.

How is a guardian appointed?

Any relative, state official, or other person may ask the court appoint a guardian. If you are the person who is alleged to be incapacitated, you must be informed of the petition for appointment of a guardian and of the scheduled time for hearing. The court will appoint a guardian ad litem to interview you and others, investigate, and make a recommendation to the court as to whether it is in your best interests to have a guardian. You also have the right to be represented by an attorney.

What is probate?

Probate is a legal process that takes place after someone dies. It includes:

  • Proving in court that a deceased person’s will is valid (usually a routine matter)
  • Identifying and inventorying the deceased person’s property
  • Having the property appraised
  • Paying debts and taxes, and
  • Distributing the remaining property as the will (or state law, if there’s no will) directs.

Does all property have to go through probate when a person dies?

No. Most states allow a certain amount of property to pass free of probate, or through a simplified probate procedure.

Additionally, property that passes outside of your will — say, through joint tenancy or a living trust — is not subject to probate.

Who handles probate?

Usually, the personal representative named in the will is responsible. If there isn’t a will, or the will fails to name a personal representative, the probate court names an administrator to handle the process. Most often, the job goes to the closest capable relative or the person who inherits the bulk of the deceased person’s assets.

If no formal probate proceeding is necessary, the court does not appoint an estate administrator. Instead, a close relative or friend serves as an informal estate representative. Normally, families and friends choose this person, and it is not uncommon for several people to share the responsibilities of paying debts, filing a final income tax return and distributing property to the people who are supposed to get it.

What is estate planning?

Estate planning helps ensure that your assets will pass to those people you designate in a manner that will give them the maximum benefits, helps reduce or eliminate the tax burden on your estate; and allows your assets to pass to your chosen beneficiaries without the inconvenience, cost and delay of probate.

What does an estate plan include?

An estate plan may include a will or trust, a written agreement concerning the status of your assets, a directive to your physician or a durable power of attorney and final instructions.

How often should I review my estate plan?

An estate plan should not be considered permanent. Conditions, as well as your desires, may change. Barring an important life change that warrants immediate review, an estate plan should be reviewed at least every two or three years. Life changes that might warrant review include birth, death, marriage, divorce or disability of you or a beneficiary, a substantial change in your net worth or that of your beneficiary, purchase or sale of a business or moving your residence to a different state.

What are trusts?

A trust is a relationship in which a person called a trustor or a grantor or settlor transfers an asset to another person, called a trustee. The trustee then manages and controls this asset for the benefit of a third person, called a beneficiary.

Trusts offer a number of important benefits, including:

  • Probate Avoidance
  • Avoidance of conservatorship and guardianship
  • Control of distribution and management of assets during life and after death
  • Death tax avoidance or reduction
  • Capital Gains Tax Savings
  • Retention of privacy of family assets and finances
  • Creditor protection for your beneficiaries;