Estate Planning
Estate Planning is a broad field and may be viewed better as a process. There are many devices available that one thinks of as they go through this process.
A commonly known and much thought of device is the Testamentary Will. A Testamentary Will is said to speak at death, and is the device used to transfer assets that one has acquired during their lifetime. At death, the Testamentary Will is probated and the executor of the estate will collect assets and file inventories and accountings, and at the end distribute the estate to the beneficiaries named under the Testamentary Will.
If one dies without a Testamentary Will, the death is said to be intestate. An intestate death, one who dies with no will or a will that is incomplete, will also need to be probated. Here, the administrator collects the assets and files an inventory and accountings. At the end, the administrator will disburse the assets to any heirs that are eligible under the Code of Virginia. A Testamentary Will is completely different from a Living Will and many times these devices are confused for each other.
A Living Will is a document that conveys the intention of how one wishes to die under a number of situations. A Living Will should be taken to the hospital before any surgeries and readily available in emergencies.
Powers of Attorney are another device that can assist in many facets of the law. In the Estate Planning context, Powers of Attorney can provide for ease of administration financially and medically. Powers of Attorney can be general, limited, or special. In addition, they are either durable or non-durable. A Durable Power of Attorney is effective even after the Donor of the power is incapacitated, but not after the Donor has died.
A General Durable Medical Power of Attorney allows one to appoint another, usually a spouse or close friend, to gain medical information and make decisions not governed by a Living Will, but protected by HIPAA. HIPAA is a federal act enacted under heightened worry over privacy rights. HIPAA can make it extremely difficult even for family members to gain information of a loved one. A Medical Power of Attorney is a device showing the intention of the Donor to appoint another, Donee, to be informed and make informed decisions upon their incapacitation.
A General Durable Power of Attorney like the General Durable Medical Power of Attorney is an affirmative device granting another, usually a spouse or close friend, power to deal on behalf of that person in certain situations, usually financially or administratively related. Limited and Special Powers of Attorney are best for more particular circumstances.
Trusts are a common estate planning device and are primarily used in a number of circumstances. First, a trust can provide ease of administration. Second, a trust can provide a way to remove assets from the probate process. Third, a trust can take advantage of federal taxation rules. Fourth, a trust can take care of a loved one who may not be able to take care of themselves. There are many types of trusts. They can be revocable or irrevocable; secret, semi-secret, or public. They can be private or charitable. They can be cumulative, discretionary, mandatory and/or some combination. There are trusts for special situations: A special needs trust or the honorary trust. What type of trust one chooses is mainly determined by their desired purpose. One who seeks ease of administration would choose a revocable trust, while someone who wants to take care of another would seek the creation of a Special Needs Trust. Trusts are an excellent device to carry out many purposes, but thoughtful planning is a necessity.
Estate planning can be very complex and is very personal. Many individuals who first consider what they feel is a great plan will find that as they go through the process they will repeatedly change the plan, not only because they feel different from how they felt when they started, but because the world continues to change. Loved ones die and the also win the lottery and move away never to be heard of again. The most important thing to remember is to be flexible, and review your situation every couple of years.