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Too often, estate planning has been dominated by tax issues.  With the recently increased exemption amounts, fewer families will have to write a check to Uncle Sam upon the passing of a loved one.  However, challenges still exist that are not focused on mitigating taxes.

Avoiding Probate.  Probate is the court-supervised process of transferring property from a decedent’s estate to the named heirs.  Much has been made of the “need” to avoid probate under the theory that the process is expensive, time-consuming, and public, meaning otherwise private information becomes part of the public record.  Those with real estate in multiple states may find it very advantageous to avoid multiple probate proceedings.

To avoid probate, a collection of will substitutes are available including trusts, joint ownership, Transfer on Death registration, and beneficiary designations.  Make sure all assets are registered somehow in one of these forms.  Also, make sure to coordinate these will substitutes and map out which assets are intended to go where.  It is all too common to have people diligently list their wishes in a trust or will, yet have assets end up elsewhere by virtue of joint ownership or outdated beneficiary designations.

Durable Powers of Attorney, Healthcare Power of Attorney and Living Will.  Most estate planning practitioners will prepare ancillary documents for their clients.  A durable power of attorney grants another person the authority to make financial decisions on your behalf.  A healthcare power of attorney similarly gives another person authority on medical decisions.  The living will or healthcare advance directive allows an individual to provide a written set of instructions specifying which, if any, medical treatments or care they want should they later be unable to make such decisions because of illness or incapacity.

Special Needs Trusts:  In certain circumstances, special needs trusts are needed to assist beneficiaries who face disabilities.  Some of these trusts are designed to assist with personal planning needs such as helping with investment or spending decisions, and some are created to improve the quality of a person’s life without disqualifying the beneficiary from receiving governmental benefits.

Diminished Capacity.  Executing a will or trust and most any financial transaction require a person be legally competent.  Dementia is estimated to affect 1.5% of Americans age 65-69, and nearly half of the seniors in their nineties.[1]  Varying legal standards of competency exist for different acts (e.g., marriage, executing a contract, or implementing a will).  It is often difficult to define when a person clearly moves from competent to incompetent.  Sometimes, as mental capacity diminishes, people become more susceptible to influence.  Proactive planning can help ensure a person’s wishes are carried out throughout this struggle.

Asset Protection.  Protecting assets with well-designed trusts is especially important for medical professionals.  The liability within this vocation is high, and advanced strategic planning is critical to ensure assets are not unjustly taken.

Bottom line, do not delay.  Surround yourself with a team of professionals that can ask you good questions, help you determine what’s most important, and then assist with the implementation of a solid plan.  Stay diversified.


[1] Robert B. Fleming, “Dealing with the Aging Client”, presentation at Heckerling Institute January 2014.

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