May 24, 2024
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Estate Planning Must-Haves

There are many people who believe that in order to have a proper estate plan they need only draft a will or a trust. Many put this on their “to-do lists” but somehow never manage to get these done.

However, there is much more needed in order to properly plan ahead so as to make certain that all of one’s assets are transferred seamlessly. A truly successful estate planning also includes provisions to make sure family members can access one’s assets in the frightening but all too common occurrence that they become disabled.

Generally, the following is a list of items which should be included in every estate plan:

1. Last Will and Testament

2. A Trust for those who might be too young or not capable of handling large sums of money

3. A Durable Power of Attorney for Finances to allow others to handle financial transactions and decisions on the part of someone who is either away or incapacitated

4. A Letter of intent

5. A halachic Healthcare power of attorney and Living Will

6. A Halachic Will

Guardianship designations

It is important to realize that a simple, pre-packaged will kit may not be enough; in the paragraphs that follow we will examine each item on this checklist to make sure that no decisions have been left to chance.

1. Last Will and Testament

A Will is obviously one of the main aspects of every estate plan. This is true even if one does not have what they consider to be substantial assets. Wills help to ensure that property is passed according to an individual’s wishes, that an Executor is named in order to carry out the wishes laid out in the trust, Guardians are identified to take care of minor children and that trusts are established to protect one’s assets. In addition, some trusts help limit estate taxes or legal challenges. However, simply having a Will and/or a Trust is not enough. The wording of the document is critically important.

A Will or Trust should be written in a manner that is consistent with the way one has bequeathed the assets that pass outside of the Will. For example, if one has already named their sister as a beneficiary on a retirement account or insurance policy (assets that typically pass outside of a will to a named beneficiary), then one must be careful not to bequeath the same asset to a third cousin twice removed in the Will. Such a situation could lead to a Will contest that would leave both individuals bitter toward each other (and you) as well as waging costly legal battles.

2. Durable Power Of Attorney(s)

A durable power of attorney (POA) is necessary so that an agent or a person can act on one’s behalf in the event of disability or simply being unable to be present. Without a power of attorney, a court may be left to decide what happens to one’s assets and the decision may not be what was wanted by the individual.

A Power of Attorney can give one’s agent the power to conduct real estate transactions, enter into financial transactions and make other legal decisions literally as if he or she was the individual. This type of POA is revocable by the principal at a time of the grantor’s choosing, typically a time when the principal is deemed to be physically able, deemed mentally competent or upon death.

In many families, it makes sense for spouses to set up reciprocal powers of attorney allowing each spouse to sign on behalf of the other. However, in some cases it might make more sense to have another family member, friend or trusted advisor who is more financially savvy act as the agent. In many cases, both are desirable. I once had a client who was away in Israel with his wife and needed certain financial transactions completed immediately. Thankfully, we had included his father in the Power of Attorney which made this possible. In another case, I had a client who lost a great deal of money because there was no one available to sign a financial/legal document on his behalf while he was away on business.

3. Beneficiary Designations

A number of assets can pass to one’s heirs without being dictated in the will (such as a 401[k] plan). This is why it is important to maintain a beneficiary (and a contingent beneficiary) on such an account. Very often, we do not even remember assigning these assets to someone when establishing them. As a matter of fact, it is important that all retirement accounts and insurance plans contain a beneficiary as well as a contingent beneficiary because they too typically pass outside of a Will.

Should one fail to name a beneficiary, or if the beneficiary is deceased or wishes to disclaim the inheritance, a court could be left to decide the fate of your funds.  This could be a problem as a judge that is unaware of your situation, beliefs and intent is unlikely to make the same decision that the testator would have made.

4. Letter of Intent

I always recommend the preparation of a letter of intent. This is simply a document left to the executor and/or beneficiaries. The purpose of this document is to set forth one’s reasons for doing certain things, the way that particular assets should be distributed after death or incapacitation, wishes for funeral arrangements or other special requests such as things pertaining to the care and raising of one’s children.

While such a document may not necessarily have the legal import of a Last Will and Testament or a Trust, it helps inform a probate judge, executor, guardian, and/or trustee of your intentions and may help in the distribution of your assets if the Will is deemed invalid or problematic in some way.

5. Healthcare Power of Attorney

This is perhaps one of the most important documents that one can draft in this day and age. By drafting a healthcare power of attorney and designating another individual, usually a spouse or family member, to make important healthcare decisions in the event of incapacity, one can avoid having those decisions made for them by a doctor or hospital administrator.

6. Guardianship Designations

This is, in my view, the most important aspect of a Will: who will watch and care for one’s minor children in case of the unthinkable tragedy of the loss of both parents. One should always make sure that the individual or couple chosen shares one’s views and is genuinely willing to raise children. As with all designations, at least one backup or contingent individual/family should be named as well. Without the naming of a Guardian, a court could be left to make the decision and could rule that one’s children live with a family member that would not have been the choice of the testator. In extreme cases, the court could mandate that one’s children become wards of the state.

Bottom Line

There is more to estate planning than deciding how to divvy up your assets when you die. It’s also about making certain that your family members and other beneficiaries are provided for and have access to your assets upon your temporary or permanent incapacity.

In our next article, we will discuss how halacha impacts these documents and the decisions contained therein.

Rabbi Benjamin E. Kelsen resides in Bergenfield and a practicing attorney in Teaneck. He can be contacted at: 201-608-3859 or via email at: [email protected].

By Rabbi Benjamin E. Kelsen, Esq.

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