For most of us, January represents a clean slate and a fresh start. The new year is a time of reflection as well as a time of looking forward with both anticipation and wonder. What will the new year bring us? Joy or sorrow? Gain or loss?
None of us can answer those questions; however, it’s important to be prepared for whatever the coming year brings—especially unfortunate events, such as death or divorce.
Steven W. Tarta, Esq., has been helping people prepare with estate planning services since 1972. Throughout his years of experience, Steve has “seen it all.” His conservative and professional approach is centered on analyzing his client’s objectives while considering their unique situations and their assets and liabilities. This process allows him to match his client to the appropriate strategies for asset preservation, quality of life planning, and reduction of probate expense.
“There are three to four ‘must haves’ in everyone’s estate plan,” says Steve. “The right planning can help reduce stress for your family members and ensure that your wishes are honored when the time comes.”
Wills
A will, also known as a last will and testament, is a legal document that allows you to outline what happens to your assets after you die. If you have minor children, you can designate guardians and a plan for child care as well as select the appropriate person to manage your financial matters. “I also advise my clients to appoint a funeral representative to ensure their plans are executed throughout the funeral or memorial services. It’s also important to consider assigning a digital agent to handle all digital assets, accounts, social media platforms, and passwords,” says Steve.
“When I consult with clients who come in for a will, it’s important to understand their entire picture and what will give them peace of mind,” says Steve. “We discuss various options, including gifting money to loved ones each year. In 2023 you can gift $17,000 to any number of individuals each year without any tax repercussions. You do not need to do paperwork or hire an attorney. Just write the check—that’s good information to know!”
Wills are a critical piece of the estate package for every individual. Steve also notes that if someone dies without a will, it will be cost-prohibitive for their heirs to administer their estate.
Trusts
A trust may also be in order depending on one’s financial and personal circumstances. A trust is a legal arrangement that ensures that a person’s assets are distributed to selected beneficiaries. The individual who establishes the trust places assets in the trust’s name and appoints a third party to manage those assets on behalf of the trust creator and beneficiaries. A trust goes into effect the moment it is established, unlike a will, which goes into effect after one’s death. Trusts are private documents, whereas a will becomes public record, so if there are delicate family situations where confidentiality is critical, one may want to consider setting up a trust. A trust can also offer you protection if you become incapacitated. One of the key benefits of a trust is that it simplifies the process of transferring assets and can save the designees significant costs in probate expenses. Your attorney can guide you in the decision between an irrevocable or revocable trust. An irrevocable trust means that you have removed the asset from your portfolio. A revocable trust allows you to maintain control over your assets placed therein for the balance of your life.
Power of Attorney
A durable power of attorney is also essential when making an estate plan. “Assigning a durable power of attorney will protect your interests in the case that you are unable to express your wishes yourself,” says Steve. “It’s important to designate that control to a person you fully trust—someone who will say ‘yes’ to honor your stated wishes regardless of their own opinions.”
Living Wills
Steve also strongly recommends a living will or healthcare proxy to provide direction for your loved ones to carry out your wishes when you cannot communicate them yourself. “When I went into private practice, I searched for a living will document that laid out instructions briefly and clearly. I could not find what I wanted, so I wrote my own proxy and have successfully used it for my clients for years. It’s never been contested in court,” says Steve. “A living will basically states, ‘when I can no longer speak for myself, I appoint this person to make medical decisions for me.’ It is an essential element of your estate plan.”
In Steve’s experience, there is one misstep that many people make. “Sometimes clients don’t share the whole picture with their attorney. This may be just an oversight, or they may be embarrassed or ashamed of certain circumstances. Remember that the client-attorney privilege is completely confidential, and your words will never leave the office. It is to your benefit to share all of your information with your attorney so they can create a plan that is in your best interest.”
Protect your legacy in 2023 by establishing your estate plan. “If you have these four documents, you have a vast majority of the work done!” says Steve.
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“The right planning can help reduce stress for your family members and ensure that your wishes are honored.”