Essential Planning Steps: Planning for Incapacity or Wealth Transfer

Estate planning is often thought of as tax planning. While taxes can be important, your estate plan should reflect what is most important to you: your care; family legacy; and your community or social legacy.

If you have no plan, the State in which you live will devise a plan for you, at great expense in both time and money. For example, should you became incapacitated without planning, your family would have to convince a court to appoint them as your guardian so that they could make medical decisions on your behalf, and pay your bills.

If you are seriously ill, this could leave you with no legal advocate for your rights for an extended period of time. Should you die without a will, the State will decide who inherits your legacy, without regard to your wishes or tax planning.

At a minimum, you should have

A durable power of attorney which grants the power, to someone you trust, to make financial decisions on your behalf during any period of incapacity. You should also carefully consider, and include in your durable power, language specifying who should be given access to your private medical information, which is now controlled by the Health Insurance Portability and Accountability Act (HIPAA).

A health care directive, which provides written directives to your health care providers about the level of care you chose for yourself, absent any ability to speak directly for yourself.

A will, which clearly indicates who shall receive your assets upon your demise. Such wills, for individuals with taxable estates, typically create a Credit Shelter or By-Pass Trust (mentioned below) to save estate taxes while providing support for family.

Estates with Significant Assets

For estates with significant assets, additional types of trusts may be created to achieve wealth transfer objectives. An estate planning attorney can prepare these documents for you, after you express your wishes.

An important consideration in putting these plans in place is the structure of your investment portfolio, and how it will support your goals. Pacific Portfolio Trust Co. can help you work through that analysis, and then implement a portfolio strategy on your behalf.

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