WEALTH WISE

Act now to protect your loved ones

Drafting these essential estate planning documents is key

A 2011 survey by EZLaw™ indicates that only 44% of Americans have prepared a will or other estate planning documents. What the other 56% may not realize is that neglecting to prepare these documents can cause serious problems for their loved ones.

Better safe than sorry
To avoid an undesirable outcome, prepare these documents:

Will. This legal document arranges for the distribution of your property after you die and allows you to designate a guardian for minor children or other dependents. The will should name the personal representative who'll be responsible for overseeing your estate as it goes through probate. (Probate is the court-supervised process of paying any debts and taxes and distributing your property after you die.) To be valid, a will must meet the legal requirements in your state.

If you die without a will (that is, "intestate"), the state will appoint an administrator to determine, based on the laws in your state, how to distribute your property. The administrator also will decide who will assume guardianship of any minor children or other dependents, if applicable. Bottom line? Your assets may be distributed — and your dependents provided for — in ways that differ from what you would have wanted.

Living trust. Probate can be time-consuming, expensive and public. So you may prefer to avoid it. A living trust can help. It's a legal entity to which you, as the grantor, transfer title to your property. During your life, you can act as the trustee, maintaining control over the property in the trust. On your death, a person (such as a family member or trusted advisor) or institution (such as a bank or trust company) you've named as the successor trustee distributes the trust assets to the beneficiaries you've named. Assets held in a living trust avoid probate.

Having a living trust doesn't eliminate the need for a will, however. For example, you can't name a guardian for minor children or other dependents in a trust. And a "pour over" will is a good idea. It directs that assets you own outside the living trust be transferred to it on your death.

Another benefit of a living trust is that the successor trustee can also take over management of the trust assets should you become incapacitated.

Letter of instruction. This can complement, but not replace, your will and living trust. It should provide vital information that your loved ones will need soon after your death. For example, you can include your desires for your memorial service, as well as the contact information for your employer, accountant, and any other important advisors. The letter isn't a legal document.

Durable power of attorney for property. This allows you to appoint someone to act on your behalf on financial matters should you become incapacitated.

Durable power of attorney for health care. Also called a "health care proxy," this covers medical decisions and takes effect if you become incapacitated. The person to whom you've transferred this power — your health care agent — can make medical decisions on your behalf.

Living will or medical directive. This document outlines the conditions under which you'd want life support equipment removed or other specified life-prolonging medical treatments not to be given. It generally goes into effect only if you're incapacitated and you've been certified by two physicians to be permanently unconscious or terminally ill.

Also remember to review the beneficiary designation forms on any insurance policies, as well as your 401(k) plans and IRAs, to be certain that the money will go where you want it to go.

Professional advice
Estate planning issues are complicated. To help ensure your estate planning documents will achieve your goals, consult your Fifth Third Private Bank and tax advisors as well as your attorney. The former can help you assess the tax and financial implications of your decisions. And, while you're not required to use a lawyer to draw up your estate planning documents, a legal professional can make sure all documents are properly drafted.

EZLaw™ is an online legal document creation service from LexisNexis®

Fifth Third does not provide tax or legal advice. Consult with your tax adviser or attorney for advice pertinent to you personal situation.

To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.