What Exactly Is An Estate Plan?
(This Is A Transcript Of An Interview)
An estate plan essentially is a complete set of documents that will take care of everything when you’re gone. That includes your property, making sure your kids are raised by the right people, and that things are overall done the right way. Also, something that maybe people don’t think of right away, is that issues that may arise while you’re still around. For example, there are HIPAA authorizations that are required in order for someone to make medical decisions on your behalf, and financial decisions that could be made on your behalf through a general durable power of attorney. So these are 2 of the documents that would be included in a complete estate plan as well as a will, and any appointment of guardians for children.
However, there are a whole bunch of critical issues that perhaps they haven’t thought of that when they come and sit down for a counseling session and we go through all of the questions, there are typically a number of issues that come up that people hadn’t thought of in terms of what the implications of not having any sort of estate plan could potentially have. It’s really something that is for everyone, particularly people with young children; it’s not simply for the wealthy elite.
What Happens To Someone’s Assets If They Pass Away Without Setting Up an Estate Plan?
Most states, including the State of Pennsylvania, has a plan for people who fail to plan, essentially. There is a set of laws called the probate code which is followed in a situation where someone dies without a will or any other associated documents, whether it be a living trust and/or a will. So essentially there is a statutory process that has to be gone through in order for the estate to be distributed to the heirs. Those heirs are determined by law, and all of that is in the Pennsylvania Probate Code. So it’s quite possible that things, first of all, won’t go as fast as a person would have liked, and it’s also a completely public procedure.
Some people don’t care about this at all, but other people are very concerned about their privacy, and they don’t want anyone having access to their private information, such as their child getting a big inheritance or anything along those lines. So one of the problems with proceeding without a will is that it ends up becoming public. There are some things that can be done through a revocable living trust that can really address some of these privacy issues if that’s something that someone is concerned about. But the critical thing is that the person’s estate will be distributed according to law and not necessarily according to the way they would have wanted.
How Often Should Someone Maintain Their Estate Plan?
One of the things that we really talk about in our practice is this idea that we are providing a long-term counseling relationship, and that the documents that we prepare for a client are really just a byproduct of that long-term relationship. We do like to really stay in touch with our clients. We like to offer a complimentary 3-year review of their plan, particularly with young families that have children because things tend to change with marriage and divorce, or births and deaths of family members, etc. It’s always a good idea to look at it every few years, but particularly if there’s a major life change, then it might be time to take a look at things and see if there’s anything that needs to be updated or changed.
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