What is an Estate Plan & Why Do I Need One?
In this article, Koral F. Alman, Partner at Van Winkle Law Firm, explains the importance of your Estate Plan, what documents you need, and how to complete them.
Why Everyone Needs an Estate Plan.
Thinking about the future can be scary, but its inevitability makes those decisions even more important. If you do not make your estate plan, the State of North Carolina will make it for you (one way or another!) and that plan is not always what you would have selected for yourself.
As an estate planning attorney, I generally recommend to all of my clients—regardless of wealth, age, or family circumstances—that they consult with their attorney to obtain five basic estate planning documents: (1) a Last Will and Testament (2) a Living Will (or Advanced Directive); (3) a Health Care Power of Attorney; (4) a HIPAA Authorization; and (5) a Durable General Power of Attorney. Depending upon your circumstances, you may also consider including a Revocable Living Trust.
I’ve provided a brief summary of these documents below, but I strongly recommend that you contact an estate planning attorney to discuss your specific situation.
Last Will and Testament. This document allows you to provide instruction as to what is to happen to your various asset after your death. It also allows you to appoint someone—called an Executor—to collect your assets, pay any debts, taxes, or expenses, and then distribute the remaining assets to your beneficiaries. If you do not make a Will, the State of North Carolina will make one for you via the state’s intestacy statute. This statute will rarely match your own wishes and may, in fact, require a disposition plan for your assets that is against your own wishes.
Living Will (or Advanced Directive). This document provides guidance for end-of-life decision-making. A Living Will allows you to provide clear guidance about withholding or withdrawing life-prolonging measures (e.g. ventilation, dialysis, tube feeding, etc.) under specific, defined circumstances.
Health Care Power of Attorney. This document allows you to appoint individuals (Health Care Agents) to make health-related decisions for you when you are unable to communicate those decisions for yourself—whether that is due to incapacity, unconsciousness, or other reasons. This document also allows you to limit the authority granted to your Health Care Agent. This is especially important if you do not consent to certain medical treatments (e.g. blood transfusions, electroconvulsive therapy, etc.).
HIPAA Authorization. This document allows identified individuals to communicate with their physician and healthcare providers. For example, this document can allow your Health Care Agent to review your health records, speak to your physician, and, therefore, make educated decisions about your health care.
Durable General Power of Attorney. This document allows you to appoint someone to make financial-related decisions for you when you are unable to do so for yourself. Importantly, your General Power of Attorney allows your agent to have “co-extensive” power with you. This means that to the extent you are able (or want) to perform certain tasks, you are able to do so. Your agent can carry out the remaining tasks. Over time, your agent can begin to perform more and more activities, if appropriate. This document only has effect during your lifetime and terminates at your death.
Revocable Living Trust. Similar to a Last Will and Testament, this document has the added benefit of allowing individuals to minimize probate—the process for distributing assets under the Last Will and Testament which is overseen by the courts. A Revocable Trust can also provide privacy, cost savings, and other benefits for some individuals. A Revocable Trust, however, is not appropriate for all clients. Importantly, Revocable Trusts do not provide creditor protection or allow an individual to avoid taxes at death. It can, however, include provisions that can provide tax savings or implement other strategies.
The information provided in this article does not, and is not intended to, constitute legal advice. All information is for general informational purposes only. No reader should act or refrain from acting on the basis of information in this article without first seeking independent legal advice.
Koral F. Alman is a partner with the Van Winkle Law Firm in Asheville, NC. She focuses her practice on estate planning, probate law, and trust administration. Koral serves as a member of the Four Seasons Board of Directors.
For more information on creating or updating your estate plan and a referral to an attorney, contact the Foundation at 828.513.2440 or Development@FourSeasonsCFL.org