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Estate Planning 101

January 07, 2021
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One of my goals for my clients is to have professional alliances in other areas that are crucial to your financial plan that I can introduce you to.  I also want to give them a voice on my blog as they are the subject matter experts.  Today I want to introduce you to Philip Tobolsky who is an attorney in Howell, NJ and a very good friend of mine.  He has done estate planning for countless clients of mine over the past few years, so I asked him to write about the basic documents needed for your estate plan.  Throughout 2021 Phil will add a few more posts with some more advanced estate planning ideas and techniques should you require that.  If you are married, if you have children, if you have ANYTHING, these documents should be in place. I will add Phil’s contact information at the bottom of this post.  You can also reach out directly to me and we can coordinate a meeting.   

ESTATE PLANNING…WHAT IS IT?

AN INTRODUCTION

(To keep things simple, today we will discuss four significant documents most common to Estate Planning.  There are others, which we will keep for another time)

Often, people believe that estate planning is for wealthy people.  The term “estate” is frequently misconstrued.  You too have an estate. In fact, nearly everyone does. Your estate is comprised of everything you own…your car, home, other real estate, checking and savings accounts, investments, life insurance, furniture, personal possessions. No matter how large or how modest, everyone has an estate.

LAST WILL AND TESTAMENT (document no. 1)

(commonly known as a “Will”).

When you leave this earth, you probably want to control how the things mentioned above are given to the people or organizations you care most about. To ensure your wishes are carried out, you need to provide instructions stating to whom you want to give something of yours, what you want them to receive, and when they are to receive it. You will, of course, want this to happen with the least amount paid in taxes, legal fees, and court costs.

 In order to accomplish your wishes, you need a will that not only expresses your wishes, but may also include the name of a guardian and a trustee for minor children.

 LIVING WILL (document no. 2).

 Another common document in estate planning is a Living Will.  A Living Will, despite its name, isn't at all like the wills that people use to leave property at their death. A Living Will, also called a directive to physicians or advance directive, is a document that lets people state their wishes for end-of-life medical care, in case they become unable to communicate their decisions.

 POWERS OF ATTORNEY (documents nos. 3 and 4).

What Is a Power of Attorney?  First, there are two kinds to consider…a Healthcare Power of Attorney and a Power of Attorney over Finances.

A power of attorney is a legal document that gives someone of your choice the power to act in your place under certain circumstances. In case you ever become mentally incapacitated, you'll need what are known as “DURABLE” powers of attorney for medical care and finances. A durable power of attorney means that the document stays in effect if you become incapacitated and unable to handle matters on your own. (Ordinary, or "nondurable," powers of attorney automatically end if the person who makes them loses mental capacity.)

With a valid Power of Attorney, the trusted person you name will be legally permitted to take care of important matters for you (e.g., paying your bills, managing your investments, or directing your medical care) if you are unable to do so yourself.

Taking the time to make these documents is well worth the minimal effort it will take. If you haven't made durable powers of attorney and something happens to you, your loved ones may have to go to court to get the authority to handle your affairs.

To cover all of the issues that matter to you, you'll probably need two separate documents: one that addresses health care issues and one that addresses financial issues.

To further distinguish the two different Powers of Attorney, let’s delve just a bit further.

MEDICAL POWER OF ATTORNEY (document no. 3)

A Medical Power of Attorney is one type of health care directive; it is a document that sets out your wishes for health care if you are ever too ill or injured to speak for yourself.

When you make a Medical Power of Attorney, commonly called a "durable power of attorney for health care", you name a trusted person to oversee your medical care and make health care decisions for you if you are unable to do so. Depending on where you live, the person you appoint may be called your "agent," "attorney-in-fact," "health care proxy," "health care surrogate," or something similar.

Your health care agent will work with doctors and other health care providers to make sure you get the kind of medical care you wish to receive. When arranging your care, your agent is legally bound to follow your treatment preferences to the extent that he or she knows about them.

To make things easier, some states combine a Medical Power of Attorney and a Living Will into a single form, commonly called an “Advance Health Care Directive”.

FINANCIAL POWER OF ATTORNEY (document no. 4)

A Financial Power of Attorney is a document that gives someone the authority to handle financial issues on your behalf. Some financial powers of attorney are very simple and used for single transactions, such as closing a real estate deal. But the power of attorney we are discussing here is comprehensive; it's designed to let someone else manage all of your financial affairs for you if you become incapacitated. It is called a Financial Power of Attorney.

With this document, you can give a trusted person as much authority over your finances as you wish. The person you name is usually called your "agent" or "attorney-in-fact," though he or she need not actually be an attorney.

Your agent can handle simple tasks such as sorting through your mail and depositing your checks that are made payable to you, as well as more complex jobs like watching over your retirement accounts and other investments, or filing your tax returns. Your agent doesn't have to be a financial expert; just someone you trust completely who has a good amount of common sense. If necessary, your agent can hire professionals (paying them out of your assets) to help out.

 

When we meet again, we will discuss some complexities and relevant documents regarding estate planning.

 Philip D. Tobolsky

68 Ramtown-Greenville Rd

Howell, NJ 07731

732.785.9724

ptlaw@optimum.net

Philip D. Tobolsky, Birds Eye Wealth and Securities America are separate entities.