Estate Planning

Estate planning is the management and distribution of wealth through the use of wills, trusts, powers of attorney, beneficiary designations and other tools. Although state law provides a contingent plan for those who pass away without a will, those laws do not account for the personal needs and desires unique to each client. By formalizing your intent in writing, you can be certain that your desires will be known, respected and followed when you are no longer able to verbalize them yourself.

Estate Planning includes both during-life benefits and after-death benefits.

During life, estate planning can establish and name the person or persons who will make necessary medical and financial decisions for you in the event you can no longer communicate for yourself. Often parents overlook this important planning consideration when their children turn the legal age of majority (which is 18 in most states, including Tennessee). Intrinsically, estate planning demonstrates to your loved ones that you cared enough about them to make arraignments for them, rather than leaving your affairs in disarray for them to sort out. Estate planning also provides peace of mind, because knowing exactly how your assets will be used to continue supporting your loved ones when you are no longer able to yourself brings a great sense of comfort.

After death, estate planning can ensure your surviving loved ones are provided for in the same or similar manner as you provided for them during life. Estate planning also can minimize the estate tax burden often associated with the transfer of assets from the deceased to the surviving loved ones.

There are many documents used to meet Estate Planning Goals. Among those documents are Wills, Trusts, Powers of Attorney and Living Wills.

A Last Will and Testament (sometimes just called “a Will”) is a written document that takes effect at the death of the Testator/Testatrix (the person signing the Will). A Will gives direction to the Personal Representative named in the Will on how to administer the estate after the Testator/Testatrix has died. The court process of administering a Will is called probate. In Shelby County, Probate Court is a stand-alone court presided over by Probate Judges. This varies county by county, depending on the size of the county’s population.

A trust is a contractual agreement between the Grantor and the Trustee designed to guide the Trustee in managing the assets of the Grantor. A Trust creates fiduciary relationship between the Grantor, Trustee and the Trust Beneficiaries with regard to the property transferred into the Trust. There are many types of trusts. One particularly popular form of Trust is the Revocable Living Trust (also known as an Inter Vivos Trust). As the name implies, this type of trust may be revoked by the Grantor at any time prior to death or incapacity. Once the Grantor passes away, however, the Trust becomes irrevocable (because the person with the power to revoke it is no longer living). One of the primary benefits of a Revocable Living Trust is that it has the potential to eliminate the need for Probate administration. Many clients find this to be an important characteristic of their estate plans. Other trusts have more particular purposes, based on the client’s unique circumstances, such as Gift Trusts, Charitable Trusts and Life Insurance Trusts.

Two broad categories of Power of Attorney are the Financial Power of Attorney and the Health Care Power of Attorney. Occasionally, language for both will be found in a single document, but there are advantages to using separate documents for each. A Financial Power of Attorney (often called a General Power of Attorney) allows the Principal to name an Agent to act on his or her behalf with regard to financial matters. This can include paying bills, talking with financial advisors and making gifts to charity. A Health Care Power of Attorney allows the Principal to name an Agent to act on his or her behalf with regard to health care matters. This can include selecting a doctor, approving surgery or talking with a pharmacist.

Finally, a Living Will provides loved ones with direction regarding end-of-life decisions that affect the client. Typically a Living Will only has two questions, one regarding organ donation and one regarding maintenance or removal of life support.

All of these documents work together to create a complete estate plan. If any of the pieces are missing, the whole picture is incomplete.