In our last post, we began discussing the documents you should have in place if you wish to avoid the possibility of family conflict down the road in regard to your estate plan. Without these basic documents in place, family may be left guessing-and disagreeing-about a course of action to take in regard to you and your estate.
In addition to an advanced health care directive and a power of attorney for purposes of asset management, there is the will. Your will is the means by which many people transfer their assets upon death. Wills are usually fairly inexpensive, but because property passed by will goes through probate, which is expensive and time-consuming in some states, some people opt for a trust-based estate plan. Property passed by trust avoids probate, though even individuals with a trust-based plan still need a will.
Living trusts are a typical vehicle for those who wish to have a trust-based estate plan. These plans boast more privacy from the public eye, cheaper costs, and greater flexibility in terms of distribution. In addition, distribution usually takes place quicker in these plans and your wishes are less likely to be contested than if you had a will. For some, there may also be estate tax savings. Trusts are, however, more expensive to create and maintain than wills. You also need to make sure the trust is adequately funded At your death, your trustee will distribute your personal property to your beneficiaries, avoiding potential conflicts.
Another important but less-known document is the HIPPA Release Form. This form allows your family members and other trusted individuals to easily handle your health insurance matters in the event you become incapacitated. The release form allows the individuals you list in your advanced health care directive and/or power of attorney to have access to your healthcare information so they can handle questions of insurance.
It would be impossible to completely plan away all family conflict. Some things just happen. But by taking the proper steps and setting a solid plan in place, you can at least decrease the possibility of conflict, which often arises because there is no solid plan in place.
Source: Forbes, “5 Key Estate Planning Documents To Help Avoid Family Conflicts,” October 21, 2011.