Estate Planning Overview

When you hear the term “estate planning,” what comes to mind?

Many people assume or know it has something to do with a will. Estate planning also involves making other types of arrangements that take place once your life has ended.

A good estate plan addresses many aspects of your current situation, as well as how to thrive in the years to come. Consider keeping this definition of estate planning in mind as you look to your future: Estate planning is the process of caring for yourself and your assets while you are living, in addition to planning for the orderly transfer of assets to other persons and organizations — both during your life and afterward.

Why do estate planning?

 Creating or updating an estate plan with your attorney is one of the most important things you can do as you age. Through the process of planning, you can:

  • Ensure the wealth you have accumulated over your lifetime goes exactly where you want it to go and at the time of your choosing. If you don’t have a will or living trust, the state will impose a distribution plan on your behalf, which may or may not match your wishes.
  • Provide directions for others to follow in case you become incapacitated and are unable to make decisions for yourself.
  • Organize your affairs and designate who will handle them when you’re gone.
  • Appoint a guardian for minor-aged children.
  • Provide for any special needs your loved ones may have.
  • Minimize possible estate taxes and probate fees.
  • Specify the type of funeral arrangements you would like.
  • Remember and provide for friends, pets and organizations about which you care but unfortunately are never included in the default state distribution scheme.

By planning for your estate, you will also make things easier for your family. If something happens to you, your family and other loved ones will already be navigating a very difficult time. Having your desires and instructions on hand will make managing your affairs easier on your loved ones. Consider the planning you do now to be your final future gift to the important people in your life.

While estate planning can entail some difficult choices and means confronting some uncomfortable issues, it can provide a sense of calm once everything is in place. You’ll know that you’ve done your best to plan and provide for yourself and your loved ones, as well as for the causes about which you’ve cared during your lifetime. Many who leave legacy gifts find great satisfaction in knowing what their legacies on Earth will be. 

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The Key Elements of an Estate Plan

Related to your final wishes

  • Will. A valid will is generally type written, dated and signed by you and two legally competent witnesses. States differ as to the exact requirements for a valid will and whether a handwritten will, with or without witnesses, is valid. The probate court oversees administration of a valid will at death to carry out your instructions. The court charges probate fees to administer an estate, and the documents and proceedings are public record.
  • Revocable Living Trust. This replaces the will as the main document disposing of your property. You may hear it referred to as a “living trust” or “RLT.” The trust is created while you are living, and you can retain the power to change and even revoke it. Most often, people serve as the trustee for their own revocable living trust. In order for a living trust to be effective, you must actually transfer your property into it. A living trust allows assets to pass to heirs outside of the probate process (potentially saving probate fees) and keeps your affairs private.

Typically, if a living trust is recommended, your estate planning lawyer will suggest a will as a backup document for any assets that weren’t included in your trust at the time of your death.

  • Beneficiary Designations. Your will or living trust does not control distribution of assets such as your IRA, commercial annuities and some other assets at death. Your IRA or annuity administrator will distribute these types of assets according to a beneficiary designation form on file with their office. These are the forms you fill out when you establish IRAs or other types of retirement plans or purchase a commercial annuity or life insurance policy. This form directs the administrator to whomever should receive what remains in these accounts upon your passing. You can (and should!) also request a beneficiary designation for any bank or investment accounts. Since your will and living trust do not apply to these important assets, these beneficiary designations can have a profound impact on how your overall estate is distributed and should be part of every coordinated plan.

Providing for physical or mental incapacity

  • Power of Attorney (POA) for financial matters. This document grants the ability to act on your behalf for a variety of potential transactions and responsibilities to someone you trust. You decide when the POA will become effective and the extent to which the authority is granted. A POA is effective only during your lifetime and automatically terminates upon your death.
  • Health Care Power of Attorney (HCPOA) for health care decisions. This document appoints someone to make decisions for you regarding medical treatment if you unable to make these decisions for yourself. It allows you to specify who has the authority to make critical treatment decisions and, perhaps more importantly, who does not have that authority.
  • Physician’s Order for Life-Sustaining Treatment (POLST). This document describes what health care treatment you want in case of an emergency. You work with your doctor to document your wishes regarding resuscitation and other life-sustaining procedures.

Managing and distributing your wealth

When starting the estate planning process, it is important to first establish what you can do to ensure your own well-being. Once you’ve met your current and future needs, you are then able to plan how to best provide for your family members, friends and other loved ones. Thereafter, you can think about the legacy you’d like to leave for the organizations and causes that are important to you, if you have the means and desire to do so. 

We hope that you will consider arranging a gift to Robin Hood when you create (or update) your estate plan. Of course, we believe that a gift to Robin Hood should never replace one for a family member or other loved one. Part of your planning process should be considering how much to leave to individual heirs; what remains can be used to fulfill your charitable dreams and desires.

How much to leave to your descendants is a judgment call unique to each person. Some people choose to transfer as much of their estates as possible to heirs. Others fear that transferring too much wealth may discourage productivity and undermine self-motivation. A memorable line from the movie The Descendants encapsulates this debate nicely: “You [want to] give your children enough money to do something but not enough to do nothing.” Others decide that the community and world they leave to their children and grandchildren is also an inimitable part of their legacy.

If you would like to support Robin Hood through your will or living trust, click here for sample bequest wording you can share with your attorney. You can also consider a gift by beneficiary designation also known as a "bequest substitute." This has many of the same advantages as a bequest while being among the most tax-wise ways to give.