Most people hear the phrase “Last Will & Testament” and immediately think of the dozens of identical movie and television scenes where a deceased person’s attorney “reads the will”. Unfortunately, this stereotypical deceased person usually passed away at an advanced age, leading viewers to believe that having a Will is only valuable when you are at a similarly advanced age. This couldn’t be any further from the truth.
Another common misconception surrounding estate planning is that you must be wealthy in order to really need one. An estate plan can be just as valuable to a 24-year-old with less than $1,000 in the bank, as it is to a 65 year-old multi-millionaire. The reason being: estate plan documents give a person decision-making power in situations where they would otherwise be unable to make those decisions. In order to better illustrate this point, allow me to describe the functions of various estate plan documents.
- Last Will & Testament: This document gives the client the power to direct the disposition of his/her (probate) property after he/she dies. Example: “I give my car to my nephew, Jesse”. Without this document, all of the deceased person’s (probate) property is disposed of according to the laws of the state of Ohio, which generally goes to next-of-kin. Property disposed of via Will must be performed under the supervision of the Probate Court through the administration of a “Probate Estate”.
- Durable Power of Attorney: This document gives a client the power to name another person (or group of people) who will have the power to access and use the signer’s assets (financial and otherwise) in the best interest of the signer, should that signer be incapacitated. Please note that this document is only operative when the signer is alive.
- Healthcare Power of Attorney: This document gives a client the power to name another person (or group of people) who will have the power to make medical decisions on behalf of the signer, should that signer be incapacitated.
- Living Will: This document gives a client the power to designate another person (either medical professional or otherwise) who will have the power to withdraw life-sustaining treatment from the client under very specific circumstances.
- Revocable Living Trust: This document creates a legal entity called a “Trust” wherein the signer can deposit his/her property and determine how that property is disposed of when he/she dies. This is a popular option for property disposition because once the property is deposited into the Trust, it becomes “non-probate” property, which means that after the signer (or “Settlor” of the Trust) dies, the property can be disposed of without the opening and administration of a probate estate. Also, the client will maintain complete control of all property deposited into the Trust by being named as “Trustee” of the Trust. These trusts can be modified or revoked at any time by the client.
- Transfer on Death (TOD) Affidavit: (*Real estate only) This document, once recorded with the county’s records office, gives the client the power to decide who inherits his/her real estate after he/she dies. A TOD Affidavit functions as a nearly automatic transfer of real property upon the death of the owner, therefore making the subject land non-probate property once the Affidavit is recorded. Can be amended or revoked at any time.
- Survivorship Deed: (*Real estate only) This document allows a client to designate who will inherit his/her real estate after his/her death by giving that person a current ownership in the property and stating that upon the client’s death, that co-owner shall automatically inherit the client’s interest. The primary different between a Survivorship Deed and a TOD Affidavit is that a Survivorship Deed gives the designated person a current and future interest in the property, where a TOD Affidavit only gives a future interest in the property. This option is very popular for married couples and domesticpartnerships.
The documents listed above give a prospective client multiple options on how situations are to be handled on his/her behalf when they are unable to participate in those situations, and there are other options as well. Should one of those situations occur without an estate plan in place, a client would have very little, if any, effect on the outcome. However, with an estate plan in place, the client’s directions and desires will completely govern the outcome of an applicable situation. This kind of decision-making power is valuable at any age.
Finally, the creation of many clients’ estate plans are one-time occurrences. Even though we would always recommend our clients periodically review their estate plan in order to decide if they would like to make any updates, many clients direct us to draft them in a way that they cover several contingencies and therefore “set it and forget it”. Once an estate plan is finalized, it is effective if/until the client revokes or modifies it. So if you don’t already have an estate plan, what are you waiting for? Contact us today at either (330) 826-1098 or kandraylaw@gmail.com and put your mind at ease!