Estate Planning - Question #1:
What exactly is an "estate" and who needs an estate plan?
Defining an "Estate"
As estate planners, one of the most common misconceptions we hear is that estate planning is only for the wealthy. Perhaps it is something about the word “estate” that conjures images of mansions, substantial bank accounts, and luxurious art or jewelry collections. We can understand why. Hollywood prefers to dramatize the death of an affluent movie character with disputes over assets and embellished readings of the Will or Trust to family members with their ears perked. However, the term “estate” simply and literally means the assets and liabilities owned by a person at death.
What is an Estate Plan?
At its most basic, a complete estate plan includes at least 3 documents: a Will, a Financial Power of Attorney, and a Health Care Power of Attorney with Living Will provisions. (The level of wealth possessed, and other family circumstances or objectives, may lead our team to also suggest a Revocable Living Trust, but this is part of our analysis in first meeting with clients.) These documents form the core and foundation of estate planning which seeks to avoid disaster and confusion in the event of incapacity or death.
Who Needs an Estate Plan
Any adult (here in North Carolina, a person 18 years or older) should have an estate plan. Age, wealth, background or unique family circumstances do not change this necessity. Creating an estate plan helps adults control the outcome of where and how their property will be distributed in the event of death and who will act on their behalf during lifetime and after death. Therefore, any adult who prefers not to leave these important decisions to chance or to state law should clearly spell out their wishes in a complete and properly executed estate plan.
One group of individuals who often overlook the need for an estate plan is students in college. Turning 18 and heading to college can be an exciting time for young adults, but often students and their parents are blissfully unaware that the parents no longer have legal authority to act on behalf of their child. For example, if the student is admitted to a hospital while away at college, his or her parents do not have automatic power of attorney over their child's health care or access to their medical records. Therefore, we recommend that young adults use the summer after high school graduation or breaks spent at home from college to take care of this important planning matter.
We make the estate planning process as easy and understandable as possible by breaking it down into manageable pieces and guiding clients through decisions. That way, they can complete the process feeling confident and secure in where and how their property will be distributed at death and who will be charged with carrying out their wishes. Our goal at Erin Patterson Law is to help clients take control instead of taking a chance.
Check back regularly for the continuation of our FAQ Series on our blog page where we will cover the frequently asked questions from our Practice Area pages in more depth. Please connect with our team or contact our office if you have any questions or to learn more.