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I Have a Will, Do I Need an Estate Plan Too?

Approximately 50% of American adults have written a will, and a significant amount of these individuals believe this means they don’t need an estate plan. Although this belief is untrue, it may be the leading reason why only 33% of US adults have an estate plan.

It’s a common misconception that an estate plan and a will are the same. A will is just a single component of an estate plan designed to cover much broader actions while a person is living and after death. A will is a single tool, whereas an estate plan uses multiple documents and legal strategies.

What is a will?

A will is a legal document providing instructions on how to manage your assets after your death. It encompasses names of beneficiaries, guardianship for dependents or minors, and distribution of assets. It also provides an executor for the estate. The executor is responsible for carrying out all actions stated by your will, such as paying debts, estate management, and the distribution of assets.

What is an estate plan?

Estate planning includes thinking through situations beyond basic legal documents. It can be as detailed or as simple as you want. However, there are four essential components that should be included in addition to a will.

  1. A living will details your wishes for end-of-life medical care. If you can’t communicate or make decisions while in a vegetative state or with a terminal condition, a living will specifies what medical treatments, care, life-sustaining measures, and organ donation preferences you want.
  2. A health care power of attorney, or health care proxy, is a legal document that appoints an entity or individual to make medical decisions on your behalf if you can’t. This can be used regardless of whether you are at the end of your life. The appointed person makes decisions about procedures, diagnostic exams, medications, long-term or rehab care, surgical intervention, and end-of-life care.
  3. A financial power of attorney designates someone to act in your place for matters relating to finances. The authorized individual or entity will manage all financial issues if you can’t independently handle financial affairs. This may include paying bills, preparing taxes, making real estate decisions, and managing investments. The power of attorney can be effective immediately or “spring” into effectiveness upon your incapacity.
  4. A trust is a type of fiduciary relationship where property is held by a trustee for the benefit of the beneficiary. For certain trusts, you can still retain control when living. However, at the time of death, the trustee will distribute the property to the beneficiary. This can be beneficial for distributing assets if privacy is important since it doesn’t involve probate court, and it can significantly reduce succession and probate legal fees and costs after death.

Do you need an estate plan if you have a will?

In short, the answer is yes. While a will is important, it’s only the first step in creating an estate plan. To ensure that your wishes are honored and to leave your loved ones in the best position once you die, a comprehensive estate plan is necessary.

Estate planning is a detailed and complex process. Seeking professional guidance is the best way to ensure that you are fully informed and properly executing your estate plan. Contact our Ruston, LA office by calling us at (318) 255-1760 to speak to one of our experienced estate attorneys about your estate plan.

Prevent a Family Feud from Becoming a Legal Feud

The drama, the cost, the lost time, the broken relationships – there are so many ways that family problems about end-of-life care for a parent and inheritance can have serious repercussions when these problems reach the status of a legal filing and court case. You can take steps moving beyond the possibility this might happen and create (or amend) your estate plan seeking to diffuse these potential issues before they become legal challenges.

Every situation is unique. Everybody’s family has a different mix of personalities, degrees of wants versus needs, and problem-solving skills. The American family system is more complex than ever, with a 2021 divorce rate hovering around 50 percent, divorces, remarriages, committed long-term partner relationships, biological children, stepchildren, and physical decentralization from other family members.

Fights occur in families that are rich and poor. It turns out the dollar amount is often irrelevant. Problems stem from mismatched expectations, including but not limited to:

Sibling rivalry – Tensions between siblings tend to boil over after the passing of a parent. This situation can be especially true when inheritable assets go to step-siblings. Grief often triggers reflection, and memories of clashes and disagreements never settled tend to present themselves in real-time. The settlement of your estate can become the battleground to settle the score of a long-time feud. Avoid the situation by appointing a professional fiduciary as your trustee. If you do not prefer this option, select a family member trustee with no stake in the rivalry to mitigate its effects.

The economic disparity among beneficiaries – Socio-economic imbalances of estate heirs can destabilize the entire process. A wealthier heir may afford to hold an inheritable asset, while less economically stable heirs may want to sell for immediate financial gain. The problem seems to become compounded by the number of inheritors. You can avoid these disputes by leaving specific instructions as to the preservation or sale of real property. You may opt for “cash-out” provisions that will pay the less financially stable heirs the value of their stake in the real property and allow the more financially stable heir to retain full ownership.

Co-trustees – Even family members with great relationships and the best of intentions can clash as to the administration of your estate. All it takes is two inheritors and one grandfather clock. Executors must move quickly and decisively to administer an estate because all inheritors are waiting for their share of the payout. Avoid this problem and name only one to administer your estate.

Beneficiary dependency or mental illness – Irrational behavior that becomes part of an already sensitive situation, like your death and the settlement of your estate, will slow progress and create ill will. Any history of psychological instability or substance abuse threatens to derail an orderly process. To avoid situations with chemical dependency, create contingencies for that heir to test clean for a specific time or establish a discretionary trust where a competent trustee handles access to assets on behalf of the addicted individual. In the case of mental illness, establish a special needs trust or build specific provisions into your base trust. This protection permits the beneficiary to qualify for government assistance and still receive trust disbursements.

Undue influence – End-of-life care for a parent usually falls to one person (often a sibling) handling most of the caretaking. The uneven workload and intimate daily contact can leave the caretaker believing they are entitled to more and coerce the parent to change documents to the caretaker’s benefit. Undue influence is more often than not a product of the other offsprings’ apathy. Prevention includes paying close attention to the increasing susceptibility of an aging parent and using digital means, audio-video cameras, digital monitors that track change in blood pressure et al., to identify parent stress and prevent caregiver coercion for personal gain.

Late marriage – Love knows no bounds. Late in life, marriages happen, and you can expect resentment of your new spouse by existing heirs, particularly in a blended family with children who are primarily, or only, on the settlor’s side. Divorces, remarriage, and deaths make updating your estate planning documents a must. Upon remarrying, it is essential to place assets in your trust or modify your existing trust and Will to clarify the division of assets.

Advance benefits to one heir and not others – If one of your children needs financial assistance now or another is starting a fledgling business, yet another might require a down payment for a first home or bailout money from suffocating college debt, you may opt to provide financial help. These scenarios are common but can strain relations during probate among heirs not receiving the same benefit. Avoid this situation by noting in your trust language which heir received an advancement to their inheritance and how to deduct that previously received amount from your estate assets. If you do not, some inheritors may receive a double payout, ruffling the feathers of other heirs.

Estrangement or disinheritance – Children and other potential heirs left out of inheritance typically have nothing to lose by challenging their exclusion. This situation becomes worse in the case of blended families and their complexities, particularly if the sidelined heir pairs the challenge with a secondary claim like undue influence. You can avoid this by keeping your trust updated. A more recent trust will include a more modern disinheritance clause covering changes in this area of law. Make sure you understand the specific language in your trust regarding disinheritance.

A carefully crafted estate plan that accounts for your heirs and potential relationship problems is the first step to reducing a legal challenge stemming from a family feud. An elder law estate planning attorney knows the problems that may crop up among family members and can address these issues using the appropriate legal entities with clear and specific language. Reducing the possibility of a legal challenge to your estate brings peace of mind to you and your future heirs. Schedule an appointment at our Ruston, LA office or call us at (318) 255-1760 to discuss how we can help craft your estate plan to meet your unique family situation.

Is Your Estate Plan Current?

You should check your estate plan documents every so often, to make sure they’re still good, especially with big life changes like births, marriages, divorces, and moving to another state. Children grow up, marriages dissolve, property gets sold, residences change. That’s why we recommend that you consult us for an estate-plan check-up every five years or so.

If you retire to another state, your will would probably be good, but powers of attorney vary from state to state. Documents from the “old” state might not work in the “new” one, and your documents would not be there for you when you need them.

Suppose you willed your property to your spouse and appointed that person to be your power of attorney. You got divorced, but you never got around to changing your plan. The law would usually step in to prevent your ex-spouse from inheriting, but you might be stuck with that person holding power of attorney over your property and health care.

Maybe you named your ex-spouse’s father as your executor and agent. Now he can’t stand you and blames you for the break-up.

Perhaps you willed your property to your two children equally – but now one child is addicted to opioids. Your will did not restrict how money should be spent. If your addicted child inherits a lot of money in one chunk, that money could vanish to drugs and your child’s survival might be at risk.

Or, you deeded your house to one child and made a will leaving money to your other child. Then you forgot about the deed and made another will, years later. That will split everything equally. The law would invalidate the second will as to the house because deeds supplant wills. Consequently, one child might end up receiving more value than the other. That unfairness might sour the children against each other forever.

If you got divorced, sold property, moved to another state, or did your documents more than five years ago, come see us for an estate plan check-up.

When it comes to estate planning, “once is not done.” Please contact our Ruston, LA office by calling us at (318) 255-1760 and schedule an appointment to discuss how we can help. We welcome the opportunity to speak to you.