Estate planning is simply the process of getting legal documents in place so that your chosen individuals are appointed to take care of you, your children, your assets, and your finances in the event of death or incapacity. The process also involves naming the people you want to inherit your assets when you are gone. An “estate plan” is simply a bundle of all the documents needed to accomplish these objectives.

If you don’t have a will or trust, you may think you don’t have an estate plan….but you do. It’s just that the State of Texas has written it for you! All states have a default plan for your family and assets in the event of your incapacity or death. That’s the plan you have now. Estate planning is “opting out” of the default plan and putting your wishes in place.

You have two options with your estate planning: a will-based plan or a living trust-based plan. The vast majority of my clients choose a living trust. A living trust is a document where you appoint a selected individual to manage your assets should you become incapacitated and distribute them to your family at your death. It is almost always preferable to a will because it is designed to avoid the time, expense, and publicity of probate, which a choice cannot prevent.

It comes as a surprise to many of my clients that they will not avoid probate court…they guarantee it!

I go over the difference between a will and a living trust in depth during the Peace of Mind Planning Session. The most common question I get at the end of this session is, “Why would anybody ever do a will?!” Ultimately, however, the decision is yours.

No problem! A living trust can be changed or revoked entirely if the creator is alive and has the mental capacity to do so. Any guardians for minor children can also be changed through an amendment (called a “codicil”) to your pour-over will.

All other estate planning documents (power of attorney, health care proxy, etc.) are typically recreated as it is more cost-effective.

The main point is that your documents can be updated as your life, assets, and the law all change.

A medical power of attorney allows you to appoint someone you trust to manage your medical decisions should you be unable to do so. A living will (not to be confused with a living trust or last will) allows you to make medical end-of-life decisions ahead of time.

We include a health care proxy and living will for spouses in every estate plan we create.

A power of attorney lets you appoint someone to manage your property in the event of incapacity. You will name someone you trust implicitly as your “agent.” They will step into your shoes and pay your bills, file your taxes, manage your business, etc., if you cannot.

We include a power of attorney for spouses in every estate plan we create.

No. This is the biggest myth out there. Estate planning is not related to how much money you have, whether you are married, or whether or not you are a parent.

Estate planning is putting legal documents in place that ensure your assets will go to the people you want, the way you want when you are gone. It’s about making this easy on your loved ones during an otherwise difficult time. And we all care about that, no matter how much (or little) money we have.

It’s also about appointing people to manage your property and make health care decisions for you if you are incapacitated, something that matters to all of us regardless of wealth status.

Probate is the court-supervised process of administering your estate upon your death. If you die without a will, your estate must go through probate before all your money can be distributed to your heirs. And if you die WITH a will…your estate still has to go through probate! The only way to avoid probate is with a revocable living trust.

What’s so bad about probate? Even a simple probate can take years to complete and eats up as much as 5-7% of the estate assets. It’s also a public proceeding that makes your will available to anybody who wants to look at it.

Although a will is subject to the probate process, a living trust is designed to bypass it altogether.

Let me start by saying what we do NOT need! We do NOT need account statements, social security numbers, or tax returns. We DO need information on what kind of assets you own (house, retirement account, life insurance, etc.), their relative value, and how they are titled (jointly, individually, etc.) Beyond that, we need answers to questions about your personal estate planning preferences, including:

• Who would you want raising your minor children if something happened to you and your spouse or partner
• Who do you want to be in charge of your children’s money until they are old enough to manage it themselves
• Who you want making medical and financial decisions for you in the event of your incapacity

Don’t worry if you don’t have the answers to these questions right away! You’ll have plenty of time to think things over throughout the process.