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An Overview of Estate Planning

 A guide to key terms and concepts in Estate Planning

What is Estate Planning?

Estate planning is the process of creating a written plan for the management and disposition of an individual’s estate after death. Effective estate planning considers the preservation of family harmony, minimization of taxes, how to best protect the family and the efficient distribution of assets.

Comprehensive estate planning also addresses management of your personal affairs (both financial and health care) in the event of incapacity or disability.

One of the most important components to any effective estate plan is selection and identification of the persons who will be in control of decisions and management of assets in the event of your incapacity or death. This person or persons is called a fiduciary, a person who occupies a position of trust.

Sometimes clients desire to control the timing of distribution of assets to beneficiaries. There are a variety of reasons to delay distribution. For example, a beneficiary may lack the financial maturity to handle management of the assets. Beneficiaries with alcohol or drug addiction often need assistance and safeguards dealing with money. Finally, some clients want to ensure the assets left to beneficiaries are protected from creditor claims and divorce. A properly drafted trust can provide additional layers of protection for your loved ones and ensure your wishes are carried out.

It is recommended that all persons over the age of 18 execute the following three documents to protect in the event of incapacity or mental disability

Living Will or Advance Directive is a written legal document that states your wishes regarding end-of-life medical care if you are unable to make or communicate decisions for yourself. Your Advance Directives guide choices for doctors and caregivers if you are terminally ill, seriously injured or in a coma.

Power of Attorney for Health Care Decisions allows you to designate an agent to make health and welfare decisions on your behalf when you are unable to do so due to incapacity. The exact authority provided under the Power of Attorney for Health Care depends on the instructions in the legal document.

General Power of Attorney for Finances allows you to appoint an agent to act on your behalf regarding financial and legal matters. A “durable” power of attorney continues the agency relationship after incapacity. A power of attorney may be effective immediately or become effective upon your disability. A power of attorney may be limited to a specific act or type of act. A general power of attorney allows the agent to make all financial and legal decisions of the principal

What is Probate?

Probate is the legal process through which a deceased person’s assets are properly transferred to heirs and beneficiaries. A probate court will establish the validity of a Will, or if no Will is presented, determine the proper heirs according to state laws of intestacy. In addition, probate allows creditors to make claims against the estate and ensures taxes and other liabilities are properly paid.

The following are legal documents which can make up part of a well-designed estate plan.

Last Will and Testament is a legal document by which you express your wishes as to how your property is to be distributed at death and names the person you wish to manage your affairs and the distribution of assets.

Guardian Designation is a designation you make in your Will nominating a person to act as guardian for your minor children. A guardian is the person who is legally responsible for the personal affairs and well-being of a minor child such as providing care, supervision, food, clothing, shelter, education, and consent to medical treatment.

Trust is a legal entity established by you and a trustee to hold assets for one or more beneficiaries. You can establish terms and conditions for the trust including the timing and manner of distribution of assets. These terms can provide additional safeguards for beneficiaries including asset protection. With proper planning, a trust avoids the necessity of probate and can prevent the details of your estate plan from becoming public.

Alternatives to Powers of Attorney.     

Authorized Signer is a person who is authorized to sign checks and make withdraws on your account even though not an account owner. Although this is often used as an alternative to a power of attorney, it has limitations and is not a substitute for powers of attorney in effectively managing your affairs during incapacity.

Methods to transfer property outside probate.

Joint Tenant with Rights of Survivorship (JTROS)* is a designation of real property or other asset where two or more people co-own an asset and have survivorship rights in the event of the death of a co-owner.

Pay on Death (POD)* is an arrangement with a financial institution to pay the balance of an account to someone designated by you at your death.

Transfer on Death Deed (TOD)* is a deed which transfers ownership of property at your death. A TOD deed is revocable during the owner’s lifetime and does not affect the title, or interest of ownership of the asset

Beneficiary Designation* is a designation of individuals you want to receive certain assets upon your death. Most annuities, retirement accounts and insurance contracts allow the owner to designate individuals, charities or trusts as the recipient of assets upon death.

*JTROS, POD, TOD and Beneficiary Designations transfer property upon death but may not be the most effective tools to accomplish your estate planning goals and objectives.

About Barry Law, LLC

Our client centric approach is designed to identify the best estate planning strategy to meet your individual and personal needs. We believe the most important component in any estate plan is to ensure your voice, (what is important to you) is included in your estate plan.

About David J. Barry

David J. Barry established Barry Law, LLC with the primary aim of helping families protect assets, preserve harmony and build a legacy through effective and customized estate plans.

David offers a client-centered approach to estate planning by taking the time to learn about each family and delivering a plan that incorporates effective solutions to meet the family’s personal needs.

David attended Washburn University in Topeka and graduated with a B.A. in English in 1988. David earned his Juris Doctorate from the University of Kansas School of Law in 1997.

David is licensed to practice in both Kansas and Missouri.

David enjoys spending time with his wife, Jenifer and their four children. Jenifer also works with David as the Office Manager and Client Services Coordinator for Barry Law, LLC

 

Ask us how we can help you design an estate plan which accomplishes your goals.

Attorney Advertising. This brochure is for general information purposes and should not be construed to be legal advice or create an attorney/client relationship