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Tom Roebuck
Creators.com
In a perfect world, we all would live happy, healthy, accident-free lives until one day, when we're old and gray, we pass on with our families at our sides. Sometime later, each family would gather again, only this time in an attorney's office, listening as the properly planned will is read. After the assets were divided and the deceased laid to rest, each family would emerge stronger, bound by the shared memories of the loved one no longer with us.
But that perfect world, of course, doesn't exist. People too often die before they grow old, victims of accidents, disease or countless other misfortunes. Some people live to ripe old ages but fail to leave behind properly planned estates. The division of an estate can be a wedge that drives a family apart, sometimes bringing old bitter feelings to the surface and other times creating new ones.
While we can't control events that happen after we die, we can at least influence them while we still have the chance. The last thing our loved ones need to deal with after we die is financial chaos caused by a flawed estate plan or, worse, no plan at all. The rich and the old aren't the only ones who need plans, as accidents can happen to anyone at any time.
There are various Web sites that offer assistance with making a will and other legal tasks, but implementing a sound, valid estate plan is best done with the help of an attorney, especially for people with children or considerable assets. There are several decisions to be made, not just who gets what.
During an initial consultation with an attorney, be prepared to provide information on your family, your assets, beneficiaries that you want to inherit your assets, and the person you want to act as executor. Sometimes called a personal representative, the executor administers the estate, hires the attorney, goes through the court process, and gathers and distributes the assets, according to Trisha Dellinger, an attorney with Pyle & Dellinger, in Daytona Beach, Fla.
"It should be somebody that you trust to handle your affairs and is good with money and that can handle the stress of dealing with an attorney, dealing with the court, dealing with creditors, dealing with heirs -- especially dueling heirs," Dellinger says.
Another key document is one that gives durable power of attorney. This will designate someone to act on your behalf in the event that you become incapacitated and can't make financial decisions on your own. If you pass away, the durable power of attorney becomes invalid, and the executor takes over.
"It allows the person to write checks for you, close accounts, open accounts, sell your home, mortgage your home," Dellinger says. "It gives them a lot of authority. It allows them to act as if they were you related to your money and your property."
Health care power of attorney works in the same way, but it pertains to decisions regarding medical care. While a living will spells out a person's wishes about what kind of medical care he does or doesn't want to receive, a medical power of attorney document designates someone to make medical decisions for the afflicted.
"A health care power of attorney is a much more important and expansive health care directive than a living will," says Sandy F. Kraemer, an attorney in Colorado Springs, Colo., and author of "60-Minute Estate Planner" (AMACOM). "It specifically delegates decision-making on all health issues."
Putting together these documents will do no good if they are not properly signed, witnessed and legally filed with the court. There are other mistakes that people make that can complicate the implementation of an estate plan.
"They don't designate beneficiaries properly on their life insurance and their retirement accounts; they do not title their real estate properly to make it flow with the estate plan; they do not title their investment portfolio accounts properly; and they do not regularly review their wills and trusts to ensure they achieve their goals as their lives and finances change," Kraemer says.
Estate plans should be reviewed every few years or after a major event, such as an addition of a new child or a change in the tax laws. Right now, estates worth more than $3.5 million are subject to a federal estate tax. That tax is set to expire in 2010, when it will go away under the current codes. However, the Obama administration has said that will not happen.
"There will be changes," Kraemer says.
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