Estate Planning
Overview
At Stagecoach Insurance, we believe that a properly structured estate plan helps ensure that your family and financial goals are addressed during your life, if incapacitated, and after your death. The following provides an introductory discussion regarding essential planning individuals should consider, as well as an overview of lifetime gifting strategies and long-term trust planning.
Essential Documents
Last Will & Testament
Revocable Living Trust
Durable General Power Of Attorney
Health Care Power Of Attorney
Living Will / Advance Directive
Last Will & Testament
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• Name an executor, avoiding the trouble and cost of a court-appointed administrator.
• Avoid bonding costs.
• Avoid annual reporting/accounting to the probate court.
• Name a guardian for minor children, substantially eliminating the likelihood of a court-appointed guardianship.
• Protect the children’s inheritances in the event your surviving spouse should remarry.
• Retain assets in trust if distributions to your heirs at your death would be inadvisable.
Durable General Power Of Attorney
A power of attorney is a document that allows a person (known as the “Principal”) to appoint another person or organization to handle affairs while the Principal is unavailable or unable to do so. The person or organization the Principal appoints is referred to as an “Attorney-in-Fact” or “Agent.” A general power of attorney can grant the agent limited or broad powers as specified in the document to manage the principal’s financial affairs and property. Some of the powers that may be granted include:
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involving U.S. securities
+ Entering safety deposit boxes
+ Buying and selling property
+ Purchasing life insurance
+ Settling claims
+ Entering into contracts
+ Buying, managing or selling real estate
+ Filing tax returns
+ Handling matters related to government
benefits
+ Maintaining and operating business interests
+ Making gifts and consenting to splitting gifts
made by the principal’s spouse
+ Making transfers to RLTs
Revocable LIving Trust
living trust can be established to govern the
distribution and use of the trust assets during the grantor’s lifetime, which can make it a useful planning tool in the event the grantor becomes incapacitated.
In essence, the trust is like a rulebook (which can be modified or revoked by the grantor during lifetime) for how the grantor’s assets are to be handled while alive and after death. Establishing one of these may provide the following benefits:
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+ Avoidance of Probate. Probate is the legal process for transferring property upon death. Assets owned in an RLT do not pass through the probate process, potentially enabling a faster and less costly method for transferring
assets upon death than by a will, which would require probate and sometimes court
supervision. An RLT also can be especially useful in avoiding multiple probate proceedings when an individual owns real estate or other property in multiple states.
+ Privacy Preservation. At an individual’s death, when assets are passed to the heirs through probate under a will, probate may expose details of an estate to the public through public probate court filings. In contrast, trusts allow the transfer of assets to remain private within the constraints of the trust document.
+ Segregation of Assets. An RLT may be useful
for married couples with substantial separate
property acquired prior to the marriage. In community property states, the trust can help segregate those assets from their community property assets.
+ Estate Tax Minimization. An RLT does nothing to save estate or income taxes during
life, but provisions can be included in the trust, as with estate tax-efficient wills, to take advantage of estate tax exemption amounts at death
Health Care Power Of Attorney
A Health Care Power of Attorney allows the
principal to designate an agent who will have the authority to make health care decisions on the principal’s behalf in the event the principal is rendered unconscious, mentally incompetent, or is otherwise unable to make such decisions.
A HIPAA (Health Insurance Portability and Accountability Act) Authorization also is advisable. It allows medical providers to release a person’s protected medical information to another person. Individuals may include the HIPAA language in the Health Care Power of Attorney, or may use a freestanding document. If your state has a HIPAA Authorization form that has been published or approved by a state regulatory agency, consider using the approved form because medical professionals in your state will be more likely to recognize the form and release the information when requested.