Frequently Asked Questions: Estate Planning

What is a Will?

A Will is a legal document that controls the distribution of property when a person passes away. It allows you, rather than formulas set by the Virginia Statutes, to specify, “Who gets what.” A Will can also allow you to name the person or institution (called the executor) you want to manage your estate upon your death, allow real estate and other assets to be sold upon your death without a court proceeding, leave gifts to charity, and name a guardian for your minor or disabled children. A Will can also allow your spouse to become immediately eligible for Medicaid while preserving your assets for his or her benefit after you pass away.

Do I need a lawyer to make a Will?

You can create a will without a lawyer, but this can lead to numerous, financially catastrophic, problems. A lawyer with experience in this area has the judgment and knowledge needed to avoid potential pitfalls and advise best solutions for each AND every situation. You might be surprised to learn that many estate planning attorneys earn more revenue “fixing” wills created by individuals or generic services than they do creating wills themselves. It can be cheaper, and safer, to have an attorney design and implement your will. In addition, it is important to have an attorney review your will at least every three years. This will ensure it is still valid and meets your goals when your family needs it.

What is Probate?

Probate is the court-supervised distribution of a person’s assets after he or she has passed away. It is a timeconsuming, frustrating, public and needlessly expensive process. Probate usually requires all of the following, and sometimes, much more:

  • Filing a petition with the probate court
  • Notice to heirs named in the Will or, if there is no Will, to statutory heirs
  • Inventory & appraisal of estate assets & payment of estate debt to creditors
  • Sale of estate assets & payment of estate taxes
  • Final distribution of assets to heirs
  • Accounting to the Commissioner of Accounts for all estate transactions

What is a Revocable Living Trust?

A revocable living trust is a legal document capable of giving you complete control over your assets while you are alive and after you have passed away. In essence, a revocable trust is a rule book stating how your money is to be handled while you are living and how it is to be handled at your death. You must transfer all of your non-retirement account assets, including your home, into the trust in order for it to be fully effective. One of the main benefits of a revocable living trust, besides allowing your estate to avoid probate, is that it lets you make adjustments as your personal and financial situation changes.

What is an Advanced Healthcare Directive?

An Advanced Healthcare Directive, also known as a healthcare proxy or healthcare Power of Attorney, gives the person you choose the authority to make healthcare decisions on your behalf if you become unable to do so for yourself. One of its most important benefits is that it can prevent the court proceeding known as guardianship. The end result of a guardianship process is that the court chooses who will make healthcare decisions for you in the event of incapacity. Unfortunately, the person chosen by the court might not be someone you would have wanted to make these decisions. In addition, the guardianship process is time-consuming, expensive and stressful for everyone involved.

What is a Power of Attorney?

A Power of Attorney, also known as a POA, is a document created to appoint an individual or organization to handle your financial affairs while you are incapacitated or unable to make decisions yourself. This authority should include fixing taxes, selling real estate, acquiring life or health insurance, and entering into contracts. A well drafted POA should also include provisions for long-term care planning, such as your agent’s ability to create and fund revocable and irrevocable trusts, make gifts and apply for programs such as Medicaid and VA Aid and Attendance benefits.

What is a Living Will?

A living will is often created in conjunction with a Power of Attorney for Healthcare. This legal document specifies the medical services the incapacitated or terminally ill patient does or does not want to receive in an end of life situation. For example, a living will might forbid the use of certain types of medical treatment that you would not want utilized to prolong your life by extraordinary means, or forego the provision of food or water if these must be supplied using tubes or other invasive medical techniques. A properly designed estate plan should contain both a power of attorney for healthcare and a living will.

What is an HIPAA authorization?

The Health Insurance Portability and Accountability Act (HIPAA) mandated that health care providers and insurance companies who released the medical information of patients could be subject to civil fines, criminal penalties, even imprisonment. These potential penalties often make health care providers extremely cautious about sharing medical information with anyone except their patient—even family members, spouses and children. A HIPAA authorization allows you to specify individuals authorized to have access to your medical information. With a properly drafted and implemented HIPAA authorization, care providers will be far more likely to share information about your condition to the loved ones of your choosing in an emergency medical situation.

 
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