What Is the Most Essential Estate Planning Document? | Kentucky & North Carolina Estate Planning Attorneys

We often get questions about the most important estate planning document. Because so many people have made no preparations at all, they want to know where to begin. They figure that they should start with the piece that is absolutely essential and go from there.

In a way, this makes sense, but there is no single answer that is right for everyone because primary estate planning objectives vary from person to person. What is most important for one individual may not be to the next person.

That being said, we will answer the question in a general sense because it does have merit.

Asset Transfer Vehicles

Everyone is going to need a vehicle or vehicles of asset transfer. For many people, this is going to be a last will, but there are other options.

A simple alternative would be a revocable living trust. These instruments are popular in large part because they enable asset transfers outside of probate, but this advantage is just one of many.

For example, many individuals with disabilities are reliant on government benefits that are need-based, like Medicaid and Supplemental Security Income. A significant direct inheritance could jeopardize benefit eligibility.

Under these circumstances, a simple last will would not be a good way to transfer assets. You would want to set aside assets for the benefit of someone with special needs through the creation of a supplemental needs trust so that benefit eligibility would not be jeopardized.

This estate planning document would be the most important document in the world when you want to provide for a person with special needs, or if you are looking for other asset protection for beneficiaries, but it could be insufficient for someone else.

For instance, the estate tax exclusion is $11.4 million, and the maximum rate is 40 percent. If your assets exceed this amount, estate tax savings would be very important to you.

A document such as a qualified personal residence trust or a generation-skipping trust may be extremely valuable. However, if your assets did not exceed this amount, these documents may have no importance to you whatsoever.

Likewise, an irrevocable Medicaid trust may be very useful for some people in protecting family assets against nursing home expenses, but this may not be a concern for others.

Incapacity Planning

Incapacity planning documents are important for everyone. During the latter stages of your life you may go through a period of time when you cannot make your own decisions.

If you don’t execute legally binding documents naming your own chosen decision-makers, the state can appoint a guardian to make these decisions on your behalf. This individual may not be someone that you would want handling your affairs. You can take the matter into your own hands by executing documents called durable powers of attorney.

With these legally binding devices, you select agents or attorneys in fact who would be able to make medical and financial decisions on your behalf if you were to become incapacitated. And if you have a living trust, you could empower a disability trustee to administer your trust in the event of your incapacity.

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As you can see, the most important estate planning document depends on your unique situation, and there is no one-size-fits-all estate plan. Personalized attention is key, and that’s exactly what you will get when you work with our firm.

If you would like to schedule a consultation, we are here to help. We can be reached by phone at 606-324-5516 in Ashland, Kentucky, or 859-372-6655 in Florence, Kentucky, and our number in North Carolina is 704-944-3245 (Charlotte, NC or Huntersville, NC). There is also a contact form on this website that you can use to send us a message.