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The Heritage Law Center, LLC Blog

The Importance of a Basic Estate Plan

POSTED ON: March 12, 2014

Recently I was reminded, yet again, of how important having a solid foundational estate plan can be, no matter your net worth. Before getting into the various options regarding trust and estate tax planning, gifting strategies and probate avoidance, having a basic plan in place that you can build upon is essential.

For me, a basic estate plan consists of a will, power of attorney, health care proxy, HIPPA release and living will. These documents, while not complex or expensive, cover some serious issues that can save you and your family both financially and otherwise. I was reminded of their power last week in probate court as I assisted a very sweet elderly woman in getting a conservatorship over her husband.

A conservatorship is when the Court appoints an individual to manage the financial affairs of another. It can be a costly and time consuming process and requires the appointed conservator to file annual reports and accountings, in addition to the initial filings.

But can’t a wife just handle her husband’s affairs anyway in an emergency? Unfortunately, the answer if often no. In this case, the couple had been married for 60 years! The husband had advanced dementia and required nursing care. The wife wanted to look into assisted living options for herself and was also interested in protecting their life’s savings. In order to achieve these goals selling their house was a necessity.

The problem was that neither spouse had even a basic estate plan, naming each other as power of attorney and health care proxy. A power of attorney allows you to nominate someone who will handle your financial affairs for you should you need assistance. It avoids the need for Court intervention while empowering you to make decisions for yourself. Without a power of attorney, this spouse needed to get a conservatorship in order to sell their jointly owned home.

While obviously well intentioned, the wife still had to go through an arduous process involving months of delay, several Court hearings and a few thousand in expenses. The stress this was causing her was obvious as we sat in Court and I truly felt for her. Unfortunately, the process is the process and without planning ahead you have to go through it.

We never know when an estate plan will be needed, but don’t fool yourself into thinking things will just work out on their own. Being proactive means getting a basic plan in place and ensuring your loved ones are protected.