Understanding the Basics of
Estate Planning

An estate plan lets others know what you want to be done when you are unable to speak for yourself due to mental incompetence or after death. Have you or someone you know ever dealt with family disputes stemming from the absence of an estate plan or a Will? Unfortunately, many people mistakenly associate estate planning solely with age or wealth or neglect it altogether. According to a 2021 Gallup poll, only 46% of adults in the United States have a Will. This means that over half of American adults lack a plan to guide the administration of their estate after death. Contact  (256) 216-9884 for more information Educating yourself with basic estate planning terminology is a crucial first step.

Estate Planning

Essential Estate Planning Terms:

– Advance Directives: Legal documents drafted in advance to express healthcare preferences when communication isn’t possible.

Advance Healthcare Directives: A combination of a Living Will and Healthcare Power of Attorney, this directive covers end-of-life decisions, such as life support or artificial sustenance. It also allows you to designate a healthcare proxy to act on your behalf.

– Agent: The individual appointed through a Power of Attorney to act legally on behalf of the creator.

– Beneficiary: The person or person designated to receive monetary or tangible gifts from your accounts.

– Contingent Beneficiary: A secondary recipient named to inherit benefits if the primary beneficiary is deceased.

– Estate: Everything you own, including debts.

– Estate Plan: A legal document suite that expresses your wishes when you cannot articulate them yourself.

– Estate Planning: The strategic process of managing the administration and distribution of your estate after you pass away or become incapacitated.

– Intestate: The situation of dying without a Will in place. If you die intestate, your assets will be distributed according to state laws, which may not align with your wishes.

Living Will: An Advance Directive outlining specific medical treatments, procedures, and medications you do or do not want if you cannot communicate your desires, such as whether you want to be resuscitated or kept on life support.

– Power of Attorney: A legal document in which the principal designates a highly trusted individual (Agent) to act on their behalf with specific powers.

– Principal: The individual who requires an Agent to make decisions on their behalf. This could be you, the reader, if you choose to create a Power of Attorney.

– Probate: A court-supervised procedure for distributing assets to rightful beneficiaries.

– Trust: A legal arrangement allowing a third party to manage and hold beneficiary assets.

– Will: A legal instrument stating how your property should be distributed after death.

By understanding these terms, you can make informed decisions and avoid future complications for your loved ones. Don’t wait to start planning your estate—ensure peace of mind for yourself and clarity for your family.

Elder Law & Long-Term Care

Estate Planning

An estate plan lets others know what you want to be done when you are unable to speak for yourself due to mental incompetence or after death. Taking the proactive step to “get your affairs in order” is invaluable, and estate planning is the perfect avenue. This process ensures your intentions are honored, even if you become mentally incapacitated or after your passing. An effective estate plan includes several key legal documents that address:

  • Financial management
  • Property transfer and distribution
  • Healthcare decisions
  • Designated decision-makers
  • Funeral arrangements
  • Guardianship of minor or disabled children
  • Storage and location of legal documents

Understanding Estate Transfers

While estate planning often involves asset or property transfers, not all properties undergo the public, court-supervised probate process. Assets classified as probate property require court oversight, including property solely owned by the deceased, assets passed by a Will, and life insurance proceeds earmarked for the deceased’s estate.

However, neither law nor contract governs the transfer of non-probate assets outside court supervision. For instance, joint accounts with survivorship rights pass to surviving owners based on legal stipulations, bypassing Will provisions. Conversely, contracts with named beneficiaries, such as bank accounts, pensions, and insurance policies, can supersede a Will. If no beneficiary is designated, these assets default to the estate and enter probate.

Consult our attorney or financial adviser for insights on transferring your estate through or outside probate. Delve into methods that allow property transfer circumvention of probate court.

Documents for Estate Transfer

– Financial Powers of Attorney: This document authorizes trusted individuals to oversee your financial affairs if you’re unable or unwilling. There are two primary forms: one effective immediately upon signing and another that activates only upon a specific event, such as the legal incapacitation of the Principal. Given the correct legal language, both types are durable, surpassing any future incapacity. Choosing a highly trustworthy agent is vital, given their comprehensive access to your financial assets.

– Will: A Will is a fundamental component of estate planning, serving as a legal directive for distributing property posthumously. A Will can be revised or canceled during your lifetime. This document delineates:

Should a court find the Will invalid or absent, you are considered to have died intestate, subjecting your assets to distribution by Alabama’s intestacy laws rather than personal wishes.

In Alabama, specific requisites for a valid Will include:

Understanding Trusts in Estate Planning

A trust is a powerful estate planning tool designed to manage and transfer property effectively. It acts as a legal agreement between you and a chosen trustee, who oversees your assets for designated beneficiaries. Trusts facilitate property transfer outside the probate court’s jurisdiction, offering numerous benefits, including privacy and potentially faster distribution. Unlike a Will, certain types of trusts can take effect during your lifetime. Consult with a trusted attorney or financial adviser for comprehensive insights into Wills and trusts.

Empowering Yourself with Informed Healthcare Decisions

Advance directives are critical in expressing your healthcare preferences when you cannot communicate. These legal documents guide medical providers on life-sustaining treatment and other care decisions. Several advance directive tools are available, including:

The Living Will and Healthcare Power of Attorney are the most commonly used among these. Combined, they form an Advance Healthcare Directive, a comprehensive document outlining your medical treatment preferences and allowing you to appoint a healthcare proxy. 

This proxy is your representative in healthcare matters, and physicians may recognize this role as equivalent to a Healthcare Power of Attorney Agent. Nevertheless, it’s advisable to maintain a separate Healthcare Power of Attorney, which provides explicitly enumerated powers for the agent to make healthcare decisions on your behalf—choosing a trusted individual as your agent is crucial, as they may make significant decisions, including nursing home placement, if necessary. The Advance Healthcare Directive primarily addresses end-of-life choices, while the Healthcare Power of Attorney is a complementary document for broader medical decision-making.

Conclusion

In conclusion, An estate plan lets others know what you want to be done when you are unable to speak for yourself due to mental incompetence or after death

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