Estate Plan: When it's Needed, When to Upgrade

(Sandusky Register) - My dad built houses for a living. Even though he has been long retired, he still knows how to use his tools and mind to build a house.

On the other hand, if dad gave me all his tools, I don’t have his knowledge and skills.

So, if I tried to build a house myself, it would take me a lot longer to get the house built. I’d probably have lots of arguments with my wife. I’d likely make many mistakes and when done, it probably still would have issues. In fact, there is a pretty good chance at some point I would throw my hands up and hire someone to finish the job.

I think of the house building analogy a lot when I think of estate plans. It’s not enough to have the right tools, such as wills and powers of attorney documents, in your estate plan, you need to know how that particular tool works, what it can do and can’t do and what other tools you might need to get the job done well. This is where estate planning attorneys come in as you need to know what tools you need, when you need them and how to use them.

Let’s talk about what a person’s estate plan could look like at various stages of life.

The young adult’s estate plan: This plan is for someone over 18 who doesn’t own much and has no kids. Once a child turns 18, Ohio law says that person is an adult. It doesn’t matter if the child is still living with mom and dad, sleeps until noon on Saturdays and is still in high school.

At age 18, a parent can no longer automatically get access to a child’s health or financial information and does not have the legal right to make healthcare decisions for the child.

This estate plan is going to be geared to allowing a designated person, usually a parent, to make healthcare decisions for the adult child, gain access to health information and be able to talk to the bank if an adult child’s account has issues.

The right tools for this job are going to be a health care power of attorney, a financial power of attorney and a HIPAA release. The plan might also have a living will if desired. We’ll call this plan the incapacity plan because it provides the tools for someone to be able to handle health and financial decisions for someone else.

The next plan often happens once a person has a child. This plan includes everything in the incapacity plan because you still need to cover everything covered by that plan. However, we now need to add to the plan who would raise a child if something happened to the parent.

The odds are higher now that there are some assets as well that should be covered by a plan. The tool most often added to cover who will raise a young child, to spell out where the assets will go and state who is in charge of making sure your instructions are followed, is a will. We’ll call this the adult with children plan.

The next plan would be one that does all of the above but also adds the ability to keep things out of probate when both parents pass. This is probably a good time to remind everyone that a Will is not the right tool to keep anything out of probate.

A will doesn’t keep assets out of probate. It just tells the probate judge who you are putting in charge and who should get what once the bills are paid. A very versatile tool used to keep assets out of probate is a revocable trust. This type of trust allows you to stay in charge as the manager of the trust assets.

You can do whatever you want with your assets in the trust and you can change the terms of the trust. This is a great trust to keep your assets out of probate and to make sure that after you pass any share going to younger beneficiaries are managed well by someone you select. We’ll call this the probate avoidance plan.

Of course, this isn’t a complete list of all available plans. You might need a plan that covers children with special needs. You might want to protect your assets from creditors or long-term care costs. But the above is a good start.

If you need a good estate plan, see an estate planning attorney. Keep in mind that such an attorney’s job isn’t just to give you the tools but to give you a plan that contains the right tools you need at the right time and lets you know how to use them.

By Michael L. Brumbaugh
August 10, 2022


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