Planning Essentials

Most people have distinct preferences about decisions that will one day be made about their personal care, living conditions, and assets. No single template can cover those bases as carefully or thoroughly as your Georgia estate, will, and trust attorney can. There are three legal documents everyone should have in place to protect themselves, their family, and their future. They are:  1) a Will, 2) an Advance Directive for Health Care, and 3) a Power of Attorney. The standardized “cookie-cutter” versions of these documents that you find on the Internet can be laden with errors, opening up the possibility for legal loopholes and leaving you, your assets, and your beneficiaries vulnerable.

Aside from the three core essentials, Morgan & DiSalvo also recommend that you prepare an Ethical Will and a Letter of Instructions to solidify your estate plans.

Three Essential Estate Documents

1. Your Will

Everyone in Georgia essentially has a “will” by default in that the state has systematically determined what will become of your assets if you don’t expressly delegate how to dispose of them.

A Will is a primary estate-planning document and is a legally binding document that designates how your assets will be distributed upon your death. Your will can go hand in hand with a Revocable Living Trust with a pour-over Will, which we recommend in many instances.

When creating your Will, you’ll be asked to choose an Executor, or person who will assist with the administration of your estate. Without a  well-drafted Will, the settlement of your estate may be subject to Probate Court supervision, which can increase the time and costs of the estate administration process. In general, dealing with the Probate Court and the overall estate administration process estate can take anywhere from six to eight months to three or more years, depending upon how complex your estate is and whether any federal or state estate tax returns are required.

You can modify your Will at any time as long as you are mentally competent to do so. Your Last Will and Testament should not be confused with a Living Will – the Will deals with how your estate should be handled after your death, while a Living Will provides your family and medical care providers with information about what decisions you have made regarding end-of-life care and treatment.

Besides designating the distribution of your estate in your Will, you can

• Nominate a guardian for your minor children
• Direct how expenses (such as debts and taxes) are to be paid
• Establish one or more trusts to be funded after assets go through probate (a trust created by a Will is also known as a Testamentary Trust).

You should consider changing your Will any time your financial or family situation changes significantly, such as if you sell your business, acquire a second home, decide to have or adopt a child, get married, or get divorced. However, a well-drafted Will can also contain provisions which allow it to self-adjust for many events, such as new children or grandchildren or changes in your asset values or the tax laws. Even if you try to write your own Will, having a qualified estate attorney review it for anything you may have overlooked can help your loved ones avoid legal and familial disputes or other problems after your death. And please note: in Georgia, a holographic Will (one handwritten by the testator) is not valid; and a Will must have been signed under a certain set of circumstances for it to be valid. A competent Georgia attorney experienced in estate planning can help you avoid the many pitfalls which exist and help you ensure that your Will does what you want it to do and allows your Executor to carry out your intentions with as few problems and hassles as possible.

When planning your estate and drawing up your Will, as many as four separate federal taxes can come into play: income, estate, gift, and generation-skipping transfer taxes. State income, inheritance, or estate taxes can also be a factor. This means that your estate planning attorney should also be an experienced and knowledgable tax attorney, to help you minimize the potential impact of taxes for your loved ones.

2. Advance Directive for Health Care

It’s difficult to predict what will happen to us in the future, but there are common medical dilemmas many people and their loved ones wind up facing after an accident, illness, or injury, or when aging sets in. An Advance Directive for Health Care is meant to address those issues for you by pre-planning the decisions you want made regarding your medical care in the event you are unable to make decisions for yourself if and when that time comes. An Advance Directive for Healthcare names an agent to act on your behalf and provides your agent with advice regarding your preferences to medical treatments during certain medical situations. It also contains a “Living Will,” which directs whether or not you want life-sustaining procedures to be withheld or withdrawn in the event you become incapacitated due to a terminal illness or lapse into a state of permanent unconsciousness. An Advance Directive for Health Care only allows your agent to make medical decisions on your behalf when you lack the capacity to do so for yourself. Your medical providers are required to follow the instructions you set forth in your Advance Directive.

When creating your Advance Directive for Health Care, you’ll be advised to select an initial health care agent as well as successor health care agents in the event that your initial agent is no longer willing or able to act as your agent.

An Advance Directive for Health Care allows you to

1. Designate someone to make health care decisions for you
2. Decide what kind of medical care you would want under specific circumstances
3. Choose the types of treatments you want for end of life care
4. Pre-select a guardian for yourself, should you need one

The Advance Directive was adopted in Georgia in July 2007. The law essentially combined the prior Living Will and prior Durable Power of Attorney for Health Care into the Advance Directive for Health Care. Considering these changes and the “three year” rule of thumb for reviewing and updating estate-planning documents, everyone should now have a fresh Advance Directive for Health Care (post-July, 2007).

3. Power of Attorney

A Power or Attorney (“POA,” also known a “Durable Power of Attorney,” or simply “Power of Attorney”) allows you to empower a trusted agent and avoid the need for a formal guardianship or conservatorship (which can entail many court-related costs and hassles, including ongoing court supervision of your financial affairs). It enables you to designate a trusted agent to assist you with handling your financial and property matters if and when needed.

It is important to update your Power of Attorney frequently. Since third parties such as financial institutions and insurance companies are not required under Georgia law to accept a POA (even though it is legally valid), updating it every three years or so can help avoid the possibility that a third party will refuse to accept the document when it needs to be used.

A Power of Attorney can be written so that it becomes effective immediately or only upon your incapacity. Having a POA effective immediately allows it to be used for your convenience, such as when you are out of town. It also helps avoid undue delays, such as when a doctor or other third party must take some affirmative action to certify that you are not able to handle your own affairs.

If desired, a Power of Attorney can provide your agent with the power to fund an existing or new Revocable Living Trust on your behalf, the power to make gifts to desired individuals or charities, or the power to undertake Medicaid planning for your benefit. A POA can contain other powers that are intended to allow your agent to better ensure that you and your family are protected in the future.

Two Documents We Strongly Recommend

Aside from your Last Will and Testament, Advance Directive for Health Care, and Power of Attorney, we strongly recommend that clients prepare both an Ethical Will and a Letter of Instructions.

Ethical Will

An Ethical Will is an important estate planning document, though it is not a legal document. You are the only person who can create your Ethical Will. The Ethical Will is for you to make your personal statements (in writing, on video, or both) to your loved ones. Your Ethical Will lets your friends and family know what you believe to be important in life and provides them with the benefits of your experiences and acquired knowledge. It is essentially a “non-economic” inheritance of beliefs, realizations, and knowledge you wish to pass on to your loved ones.

When preparing an Ethical Will, it may be beneficial to imagine that you only have a short time left to live. What life lessons, values, philosophical beliefs, and religious or moral issues would you like to share with your loved ones? How would you like to be remembered? Would you like to include an explanation to others of the reasons you created the estate distribution plan that will be implemented through your other estate-planning documents?

You can prepare individual Ethical Wills for different family members if you do not wish to address everyone in a single document or video. An Ethical Will can be incredibly powerful to surviving loved ones, as it can offer them comfort and reassurance after your death, effectively carrying your voice and advice to them while they are still mourning your loss. You can prepare an Ethical Will privately or with our guidance. We recommend you keep your Ethical Will with your other estate planning documents.

Letter of Instructions

A Letter of Instruction is an informal, written communication to your loved ones and others who may serve in a fiduciary role. The purpose behind Letters of Instruction is to help your fiduciaries and family carry out your estate planning intent and administer your estate and trusts.

Your Letter of Instructions should provide clarity and critical information. It should include

1. Names, titles, and contact information for your professional advisors (such as your CPA, attorney, and financial planner)
2. A listing of assets and debts including company names and contact information, account information, and online or telephone passwords needed to access each account
3. Factors and advice you would like any trustee to consider in administering a trust, such as the types of distributions you would like him or her to make (or not make) to your children.

Please note, however, that a Letter of Instructions should not contain any information designed to specify how your assets should be divided up amongst your loved ones. That information should be provided only through your Will (and any Revocable Living Trust) and beneficiary designations, as part of a carefully coordinated estate plan. If your Letter of Instructions contains asset distribution instructions, those instructions are not legally binding, but if they contradict the instructions contained in your Will and beneficiary designations, they can create disharmony and confusion.