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What is an Estate Plan?

According to Meriam Webster, the legal definition of estate planning is “the arranging for the disposition and management of one’s estate at death through the use of wills, trusts, insurance policies, and other devices.”

All adults should plan their estates, but as we age, the importance of planning increases. Some people procrastinate with estate planning because thoughts about the end of life can feel uncomfortable. Other people believe that estate planning is only for wealthy people. However, this is not true. Wealth status and uncomfortable feelings aside, an estate plan is essential for senior adults and their families.

What is Included in an Estate Plan?

The estate is all property owned both individually and jointly if married. The property includes but is not limited to bank accounts, real estate, jewelry, vehicles, family heirlooms, other items of value, and what is owed. The estate plan serves to carry out a person’s wishes regarding the distribution of the estate itself, as well as end-of-life decisions and medical care.

Five essential components that should be included in an estate plan:

Will

A will is a legal document that manages an individual’s estate once they are deceased. It manages the distribution of assets, names beneficiaries, and appoints guardianship for any dependents or minor children. The will provides for an executor of the estate to be responsible for the estate management, paying debts, and distributing property as specified. In addition to estate management and guardianship, a senior adult can include specific instructions regarding their funeral or burial service.

Living Will

It’s important to note that a living will differs from a will. A living will is a legal document that outlines a person’s wishes for end-of-life medical care. In the event that an individual can’t communicate or make informed decisions, a living will specifies what medical care, treatments, life-sustaining measures, or organ donation preferences they would prefer if in a vegetative state or terminal condition. A living will is important for both the individual and the loved ones involved. For the individual, it protects their autonomous wishes. For family members, it eliminates the stress that comes with making critical and emotional decisions on behalf of someone they love.

Health Care Power of Attorney (Health Care Proxy)

A power of attorney may also be referred to as a health care proxy. It is a legal document that designates a trusted individual to make medical decisions on behalf of someone who is incapacitated.

A power of attorney is used if an individual can no longer make informed decisions for themselves, regardless of whether or not they are at the end of life. The individual appointed as power of attorney can make decisions regarding medications, procedures, diagnostic exams, surgical interventions, long-term care management, and end-of-life care matters.

Financial Power of Attorney (Power of Attorney)

The financial power of attorney authorizes someone to act on another’s behalf for matters relating to finances. The authorized individual will take over all financial decisions if the person can’t handle their own affairs. They may pay bills, handle taxes, real estate affairs, and make investment decisions.

Trust

A trust is a type of relationship where specific property is held by a third party, or trustee, for the benefit of another party, the beneficiary. The trustee holds that property for the beneficiary. The trustmaker still retains legal ownership and control when living. At the time of death, the trustee will distribute the property to the beneficiary.

Setting up a trust can be beneficial for distributing specific assets or pieces of property. With a trust, the distribution of property can be done without the court. It also allows for privacy, whereas a will does not. With a will, the deceased person’s assets and terms of their will are made public. Depending on the specific asset or property, privacy may be preferred.

How to Get Started

An estate plan is necessary for anyone who wants a say regarding end-of-life care and asset management after death. Having an estate plan in place protects an individual’s wishes and provides peace of mind to all involved.

Consulting and planning with an elder law attorney will help ensure all options are explored and informed decisions are made. Working with an elder law attorney provides guidance and explanations as you or a loved one navigates this process. For assistance, please contact our office at (212) 920-6371.

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