Death is not a subject most of us are comfortable thinking about, but preparing for your death – whenever it might occur – is something we should all do sooner rather than later.
The recent death of actor Sherman Hemsley illustrates this point. Hemsley, the star of the 1970s sitcom "The Jeffersons'," died on July 24 at his home in El Paso, Texas. Amazingly, Hemsley's body has yet to be buried. It sits in a refrigerator at an El Paso funeral home while members of Hemsley's family battle over his will. Flora Enchinton, who says she was the actor's girlfriend, is named as the sole beneficiary in a will Hemsley reportedly signed in June. However, a Philadelphia man who claims to be Hemsley's brother says the actor did not draw up the will.
"Unfortunately, these types of situations are not uncommon," says attorney Martin Sweet of legal information website THELAW.TV. "That is why it's so important to have an estate plan in place."
An estate plan is a series of documents that provide, among other things, instructions regarding how your assets should be distributed upon your death. It can consist of several elements, including:
• A will, which explains how your assets will be allocated
• Assignment of power of attorney to someone you trust who can take care of your financial matters if you are no longer able
• A living will, which details a person's desires regarding medical treatment if they are no longer able to express informed consent
Estate plans can also include funeral arrangements, which might involve a separate bank account to pay for expenses. This obviously would have been beneficial in the Sherman Hemsley case.
"These are the things you need in place so that your loved ones don't have to deal with them should you become incapacitated or die," says attorney Sweet.
If you are interested in setting up an estate plan, there are several things you should keep in mind:
1. Draw up an estate plan regardless of your net worth. It doesn't matter how much money you have or how much property you own, your family has financial goals and estate planning can help them meet those goals after you die.
2. Everybody should have a will. A will explains exactly where you want all of your assets to go when you die. This is also the place to explain who should get guardianship of your children.
3. Take advantage of trusts. A trust is a legal mechanism that allows you to put conditions on how and when your assets will be distributed. For example, you might put money in a trust to be distributed to your child when he turns 25. Trusts also can reduce your estate and gift taxes and allow your heirs to avoid probate court, which administers wills.
4. Understand estate tax laws. Currently, estates under $5 million are exempt from taxes. That limit is set to drop to $1 million next year, when the estate tax rate rises to as much as 55 percent.
5. Discuss your will with your heirs. If they fully understand your intentions, they can avoid conflict and disputes after you die.
If you're interested in setting up an estate plan, you should contact an estate planning attorney. A good attorney can help you provide for loved ones after you're gone or ensure your business and personal affairs are taken care of should you become mentally or physically incapacitated. To learn more about estate planning and trusts you can watch videos of local attorneys answering your questions on THELAW.TV.