Although nobody wants to think about death or disability, creating an estate plan is one of the most important things you can do to protect yourself and your loved ones. Proper planning not only puts you in charge of the legacy you leave behind, it can spare your loved ones a great deal of unnecessary stress, expense and delay in managing your affairs when you die or if you become incapacitated during your lifetime.
A Will directs the disposition of assets at death. It is a legal document that must be executed with certain formalities in order to be valid. In your Will, you name the person who will carry out your wishes.
If you die without a will, your assets will be distributed according to state law. Although many people think their assets will simply pass to their spouse automatically, this is not always the case. In Georgia, if you are married and have children, your surviving spouse will share equally with your children, and your spouse may receive only a minimum one-third share. So, for example, if a young married father dies with no will, his wife and two children would each receive one-third of his assets. Before his wife could access his accounts or benefit from her share of his estate, she would have to petition the probate court for proper authority and wait for a month or more while notice is published in the newspaper. Even worse, to access the children’s shares if they were minors, the wife would have to petition the probate court to be appointed conservator of their shares and purchase a surety bond to guarantee that she will manage the assets on their behalf. She would have to file reports with the court for every penny she spends, and obtain court permission for almost any transaction. When the children reached age 18, she would have to turn over the balance to them directly. If the children were adults, they could demand their share and force the wife to sell the marital house or liquidate accounts, leaving her in a very difficult financial situation.
Creating a will puts you in charge of the distribution of your own assets. Anyone who does not create a will forfeits that ability – which means that, if you are unmarried and have no children, the estranged brother you haven’t seen since you were 20 could become your sole heir. Fortunately, the process of creating a will does not have to be difficult. It is one of the most worthwhile investments you can make because it creates peace of mind, both for you and for your loved ones.
10 Reasons to Review
Your Estate Planning
- Have you been divorced or remarried?
- Did you receive a recent inheritance?
- Do you have a child with special needs?
- Are you curious about how the title to your
residence would pass at the death of your spouse?
- Are your estate planning documents more than five years old?
- Have you named minor children or grandchildren as beneficiaries?
- Do you own real estate outside of the state of Georgia?
- Does your current will attempt to distribute non-probate assets such as life insurance and IRAs?
- Do you or your spouse have children from a prior marriage?
- Has anyone you named as Executor, Trustee, Guardian, or Agent become disabled, died, or for any other reason is no longer a good choice?
Trusts are a powerful tool for accomplishing a wide range of goals. By creating a trust and funding it with your assets during your lifetime, you can ensure that your family never has to go through the probate process – and this is especially important if you own real estate in multiple states, as probate is often required in each and every state where your real estate is located. Although the probate process is usually relatively inexpensive in Georgia, it is quite costly in many other states, and it is always time-consuming and open to public review no matter where you are located.
Trusts can also help you control the distribution and use of your assets not just at the time of your death, but for some period of time afterward. For example, a trust can ensure that your children have access to their inheritance for basic needs, like health and education, but that your children do not receive a lump sum distribution until they are old enough to manage it wisely. Keeping a child’s inheritance in trust can also protect those assets from your child’s creditors or a divorce settlement during the child’s lifetime, or simply from the child’s poor financial judgment. You can also set aside funds in trust for the lifetime care of a disabled spouse or family member, or even for the care of your pets.
Trusts can be used as a tax planning measure. Whether there will be any federal estate tax due upon your death depends on the size of your estate and the type of planning you have created. If estate tax is a potential concern, a trust can be formed that will help ensure that you maximize the tax exemptions available to your heirs.
No two families are the same, and a trust is an excellent way to customize your estate plan to care for your family according to its specific needs. Through the use of a trust, we can help you to control not only the distribution of your assets, but also the way those assets are used by the recipient.
Financial Powers of Attorney
A financial power of attorney, or durable general power of attorney, is a simple and inexpensive way to permit someone to manage your finances if you are unable to make decisions for yourself. It can be drafted so it takes effect as soon as you sign it, or you can specify that it does not become effective unless your doctor certifies that you have become incapacitated. If you are unable to handle financial decisions for some period of time, whether due to a temporary illness or as a result of a long-term mental disability, the document will give your agent broad authority to step in and manage financial decisions for you.
On July 1, 2017, Georgia implemented a new law on Financial Powers of Attorney that should make it much easier for families to use them when needed. Under the old law, banks and financial institutions often refused to accept a Power of Attorney because they said it was too old. That caused hardship for many families. It was a common occurrence for a parent to sign a Power of Attorney naming a child as agent, but when the child tried to use it several years later because the parent had dementia, the bank refused to honor the document. That meant going above local bank managers to higher ups or even hiring an attorney to argue with the bank. Sometimes the family ended up having to go to court to file for Guardianship and Conservatorship, which was what having the Power of Attorney was supposed to prevent.
The new Power of Attorney law says that a Power of Attorney can’t be rejected simply because time has passed since it was signed. There are methods to establish that it is still a valid document. If a bank still refuses to accept a Power of Attorney after the steps outlined in the new law to prove its validity are followed, a court can order them to accept it and to pay for the costs of having to file that court action, as well as damages.
This is great news for families, because they can now have confidence that a Power of Attorney using the new form, signed after July 1, 2017, will work when it is needed. Because the new law only applies to Powers of Attorney that are signed after July 1, 2017, and the old law will still apply to Powers ofAttorney signed before that date, people with old Powers of Attorney should be sure to update them using the new form.
Using the financial power of attorney, your agent can immediately access your bank accounts, investment and retirement accounts in order to pay your bills and handle transactions; buy, sell, mortgage, and maintain any real estate you own; collect Medicare, Social Security, or other benefits to which you are entitled; file and pay your taxes; operate your small business; create a trust; make gifts to your family members; and hire attorneys, accountants, or other professionals as needed to represent you. Your agent is required to act in your best interest at all times, and to maintain accurate records of all decisions.
Without a valid financial power of attorney, your family members will be required to file a court action for conservatorship of your assets in order to be able to manage your financial affairs – and such an action is not only costly and time-consuming, it also requires your conservator to file periodic reports with the court on an ongoing basis. Creating a simple power of attorney helps your family to avoid unnecessary stress and expense, and it also ensures that you are able to choose the person who will serve as your agent.
Advanced Directives for Health Care
An advance directive for health care incorporates a health care power of attorney and a living will into one document. It is a set of instructions specifying what actions should be taken for your health care and medical treatment in the event that you are no longer able to make or communicate your preferences due to illness or incapacity. It is a way of making yourself heard when you can no longer speak to your doctor directly. The document allows you to name a person you trust – a family member or close friend – who is authorized to make those decisions on your behalf, and it also provides that person with the information they will need to be able to fulfill your wishes.
An advance directive does not mean “do not treat my illness.” Instead, your advance directive addresses situations where you have a “terminal condition” – meaning you are incurable and medical treatment will only prolong the dying process – or in a state of permanent unconsciousness such as a permanent coma where you are unaware of your surroundings and there is no expectation of recovery. An advance directive also does not mean “let me suffer” – it specifically allows for pain medication to be administered whenever appropriate to make you as comfortable as possible. As long as you are able to make decisions for yourself, your advance directive has no effect.
If you do not have an advance directive, you will receive medical treatment to the fullest extent available for your condition – which means there is a chance that you will receive more treatment or procedures than you would choose for yourself. If you have a child over 18 years old who does not have an advance directive authorizing medical providers to discuss treatment with you, the doctors are prohibited by law from discussing your child’s treatment with you, even though you are the parent.
Surveys show that one-third of Americans say they’ve had to make decisions about end-of-life medical care for a loved one, and also that 70-95% of people would rather refuse aggressive medical treatment than have their lives medically prolonged in an incompetent or terminal state. The burden of enduring the poor quality of life of a loved one, both emotional and financial, is substantial for family members as well. Taking a few moments to create an advance directive is not only the best way to make sure you receive the kind of care you want, it is also one of the kindest things you can do to help your family take care of you.