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What is Estate Planning?

By November 5, 2019 No Comments

what-is-estate-planningMany people are confused about what estate planning is. When I speak to potential clients, I hear comments such as, “I don’t need estate planning, I only want a simple Will” or “I don’t really have an estate.” Black’s Law Dictionary defines estate planning as, “[t]that branch of law which, in arranging a person’s property and estate, takes into account the laws of wills, taxes, insurance, property and trusts so as to gain maximum benefit of all laws while carrying out the person’s own wishes for the disposition of his property upon his death.” I would define estate planning in a more straightforward manner: Organizing your life so as not to leave a hot mess for your family, friends, and maybe business colleagues and clients, if you become incapacitated or die. I believe estate planning involves working with a lawyer, and also entails organization and communication on the individual level so as to avoid the hot mess scenario.

Under my definition of estate planning, a “simple” Will is estate planning (I put “simple” in quotations because people quite often think that the work needed for their estate planning is simple, when in fact it is not). And, under my definition of estate planning, even if you possess modest assets – you actually do have an estate that requires a plan.

For example, the fictitious Becky is a 28-year old professional woman who lives in North Seattle. Becky rents a one-bedroom apartment. She usually has about $7,000 in her checking account. She has a $10,000 savings account, and a retirement plan at her new job that already has a $15,000 balance. Becky has a tabby cat named Andy, a much-loved collie named Ms. Sassy, and a girlfriend, Melissa, who does not live with her. Becky struggles to manage her $98,000 student loan debt. Because of her student loan debt, Becky’s liabilities exceed her assets. So why would Becky need estate planning?

Let’s say Becky was involved in an automobile accident while biking to work and spent 3 weeks in a coma. Becky loves and trusts Melissa. She would want Melissa to help pay the bills on her behalf while she was in a coma, so that she wouldn’t default on her rent and her student loan payment. She would also like Melissa to be able to make her medical decisions. However, none of those things can happen unless Becky grants Melissa the necessary legal authority through two important estate planning mechanisms: a General Durable Power of Attorney and a Durable Power of Attorney for Health Care Decisions, both naming Melissa as her Attorney-in-Fact. Outside of the legal piece of the puzzle, what about the communication and organizational pieces? Did Becky ever talk to Melissa about what she would want if she was incapacitated? Does Melissa have access to a key to Becky’s apartment, so she can feed and take care of Andy and Ms. Sassy? Does Melissa have contact information for Becky’s family and other friends so she can notify them? Does Melissa have contact information for Becky’s supervisor at work, so he can be contacted? What about Becky’s emails and telephone messages that are piling up? Can Melissa have access Becky’s passwords so she can get into her phone, see what’s going on, and respond as needed?

What happens if Becky dies? Even though Becky still is insolvent, what would happen to Andy and Ms. Sassy upon her death? What about that great piece of art she picked up during a summer internship in Paris, that may not be worth much monetarily, but she knows that her old college roommate would love to have it. If Becky had a Will in place that included a Personal Property Addendum and information about the care of her pets, it would be clear what her wishes were so that her family, friends, and Melissa wouldn’t be left with, well, a hot mess.

Estate planning is for everyone. If you need legal assistance so that you won’t create chaos, stress and uncertainty for those you love, please let us know.

This post is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting with an attorney.

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