What Is Involved in Estate Planning?
Estate planning is constructing a plan that determines how your estate will be handled in the event of your death or incapacitation. This process typically includes the distribution of assets to heirs, settlement of estate taxes, and funeral and burial arrangements. A good estate plan should designate who will make decisions for you if you become disabled and unable to make them yourself. It may also involve planning for long-term care during your advanced years. The process of making a genuinely sound estate plan should involve the counsel of professionals who are familiar with your assets, your family structure, your goals and concerns, and Pennsylvania law on decedents, estates, and fiduciaries.
Why Is DIY Estate Planning a Bad Idea?
Estate planning is a complex process, particularly if you have minor children, a business, significant assets, or a complicated family situation. It may seem easier and more cost-effective to use information and forms you find online, but when DIY estate planning goes wrong, it can lead to serious problems. An estate plan does not come together in one document. It involves a collection of documents that create the legalities you need to ensure your wishes are carried out. An in-depth understanding of the relevant law is vital to ensure these documents are done right. Without the guidance of a skilled legal professional, errors or omissions could cause issues down the line.
The documents that make up an estate are moving pieces, and changes happen in life as time goes by. You may get married or divorced, expand your family with children or grandchildren, or acquire more money or assets. Your estate planning documents will need to be updated as life changes occur. Having an experienced attorney to help you can make the process much simpler in the long run.
What Types of Documents Are Included in an Estate Plan?
An estate is made up of a combination of documents, which may include:
- Will: A last will and testament allows you to name beneficiaries, direct how your assets will be distributed, designate guardianship for minor children, and assign an executor to ensure the terms are carried out.
- Trust: A trust is a legal arrangement to provide for the administration and distribution of your assets, both before and after your death. Trusts can be used to avoid probate and to reduce estate taxes. In making a trust, you assign a trustee to manage assets on behalf of the beneficiaries. You may act as a trustee while you are living and appoint a successor to take over after your death.
- Durable Power of Attorney: This document grants an agent of your choice the power to make financial, legal, and business decisions on your behalf in case you become physically or mentally incapacitated. These powers remain in effect until revoked or until you die.
- Advance Healthcare Directive: Also known as a living will, this is the legal document in which you state whether you want to receive life-sustaining medical treatment if you are in a state of permanent unconsciousness or suffering from an end-stage medical condition.
- Healthcare Power of Attorney: This document is used to designate a person you trust to make healthcare decisions on your behalf if you are unable to do so. It could come into play if you were unconscious or terminally ill and unable to communicate your wishes.
- Letter of Intent: This personal addition to an estate plan can be used to provide your executor and heirs with additional information about your wishes concerning specific items and detail your wishes for your funeral arrangements.
What Are Some Pitfalls of DIY Estate Planning?
A good estate plan should protect your assets, protect your beneficiaries from creditors and lawsuits, reduce tax liability, save time and money, and help avoid family disputes. Wills and trusts are two types of documents that form the foundation of an estate plan. Various pitfalls are associated with preparing these documents yourself:
- Wills: A will is a legal directive that specifies how your estate will be distributed after you are gone. It is important to know exactly what should go into a will, particularly if you have a business, minor children, or even pets to consider. A will must be physically updated to keep up with changes in your life circumstances. If it is not constructed correctly or executed properly according to Pennsylvania law, your will could be deemed invalid. If that occurs, your estate will be distributed not according to your wishes but according to Pennsylvania law on intestate succession.
- Trusts: A trust is a legal document designed to transfer specific assets to specific beneficiaries. There are several different types of trusts. Some are revocable, meaning you can change your mind about the transfer of assets, and some are irrevocable, meaning you cannot. Trusts may provide certain tax advantages for your estate, depending on the type of trust. They allow you to bypass probate and keep your beneficiaries and assets private. However, these are highly detailed, time-intensive, personalized documents that must be constructed in compliance with state laws. A lot could go wrong using a DIY trust template.
How Can an Experienced Pennsylvania Estate Planning Attorney Help?
The Peak Legal Group offers a full range of estate planning services. Our experienced estate planning attorney can sit down with you to discuss your needs and create a comprehensive estate plan custom-tailored for you and your family. We are committed to securing your assets and helping your loved ones avoid probate and taxes. Contact us at (610) 989-7064.