Whether you’re starting your first job, trying to decide who to name as guardians for your kids or trying to plan for retirement, it is important to make sure that your Estate Planning toolbox is properly stocked with the right tools for the job. As life happens that plan needs to be reevaluated and occasionally adjusted to account for changes in your life and occasionally the law. In this article we will discuss a number of Estate Planning “tools,” how they can protect you and your family and, finally, how often those tools need to be updated.
Just as any toolbox needs a hammer, nails and a screwdriver, every Estate Plan begins with the basics: a Living Will, Healthcare Power of Attorney, Financial Power of Attorney, and a Will. A living will documents your intentions for end of life treatment, namely when you are terminally ill or permanently unconscious. The healthcare and financial powers of attorney govern who makes your healthcare and financial decisions for you if you are unable to make them for yourself. Finally a will generally states two main things: who receives your assets when you die and who steps in as guardian(s) for your minor children, if any. Everyone over the age of eighteen should have these basic tools in their Estate Planning toolbox.
For some the basics is all that they need. For others, more advanced tools are required in order to get the job done right. The most common type of advanced tool is the trust. There are many different types of trusts that accomplish many different goals, so it is important that you speak with your Estate Planning attorney about what your goals are and how a particular type of trust meets those goals. Some common reasons for using a trust are to avoid probate, protect assets from the rising costs of nursing homes and long-term care, prevent children from taking lump-sum distributions of your IRA and protect a special-needs child from getting kicked off of his or her government benefits, just to name a few.
Another tool that is often used in many people’s Estate Planning toolbox is the limited liability company, or “LLC.” LLCs offer the flow-through taxation of a partnership with the liability protection of a corporation. They are a great way to diversify your assets and limit your liability exposure, particularly if you are a farmer or own multiple rental properties. Farmers also utilize LLCs for their succession planning features. An LLC’s operating agreement can use features such as “rights of first refusal” to help incentivize heirs to keep the farm in the family.
Updating your Toolbox
As life changes your Estate Plan should be periodically reviewed to make sure it still accomplishes your current and future goals. Major life events such as getting married (or divorced), having children, moving to another state and approaching retirement are all good times to reevaluate your existing Estate Plan. Whether you’re looking to stock your first Estate Planning toolbox or you simply have questions about the tools in your existing toolbox, the attorneys at AlerStallings are here to help. Call us at 877.912.3464 or click here to request a consultation.