Non-Tax Reasons for Estate Planning-Part Two
There are significant non-tax reasons for engaging in estate planning. We covered some of them in the first part of this article. Now, let’s look at some other reasons for engaging in estate planning, whether or not your estate will be subject to death taxes.
Designate Fiduciaries. Engaging in estate planning allows you to designate who will serve in various fiduciary roles after your death. In other words, you get to decide who will serve in roles of responsibility and trust after your death. You can state under your Will who will be the “executor” or “personal representative” of your estate responsible for settling your affairs after your death, including getting your final debts paid, preparing and filing final income and death tax returns, paying the expenses of settling your affairs, and administering and distributing the assets of your estate in accordance with the terms of your Will. If you want assets to be held in a Trust for your beneficiary(ies) after your death, then by engaging in estate planning you can choose who is to serve as trustee (and successor trustee) of the Trust with the authority to manage and invest the Trust assets and to make decisions in accordance with the terms of the Trust regarding proper distributions from the Trust to or for the benefit of the Trust beneficiary(ies). If you have minor or disabled children, one of the most important decisions that you can make under your Will is to designate who will serve as guardian for those children of yours. The guardian is the person who will have the care and custody of your minor or disabled child if you and the other parent of the child are deceased or are otherwise unable to care for the child.
Plan for Incapacity During Lifetime. Another important non-tax reason for engaging in estate planning is to plan for your potential incapacity. Without proper planning on your part, it may be necessary for a guardian to be appointed for you if you become incapable of managing your own personal and financial affairs. By including a Durable General Power of Attorney as a part of your estate plan, you can designate the party of your choice to have the authority to manage your property and financial affairs in the event that you are unable to do so at some point during your life. This will eliminate issues involved with things as simple as the timely payment of your bills in the event of your incapacity. If your physician ever determines that you are unable to make your own health care decisions, those decisions will need to be made by someone on your behalf. You can put advance health care directives in place (such as a Health Care Power of Attorney, Health Care Representative Appointment, and Living Will Declaration) which allow you to not only designate the person that you would choose to make health care decisions for you, but also give that person guidance in making those decisions. In your documents, you can additionally name one or more alternates to serve if the person you initially designate to handle your affairs is unable or unwilling to do so.
Regardless of whether you have death tax concerns, it is important to have a comprehensive estate plan that enables you to coordinate and state your wishes to be carried out in the event of your incapacity or death.