October 24, 2022 – Ashwani Prabhakar, Trusts & Estates Litigator spoke with Market Realist on the importance of estate planning in retirement and the difference between estate planning and a will.
Ashwani explained that there are three basic documents that can be created during estate planning — a will, a living will or health care proxy, and a revocable trust.
“A will is important for a person to ensure that their estate is distributed in the manner in which they want and not necessarily by the laws of the State in which they live,” Prabhakar explained. “However, estate planning is not complete because you have a will.”
This is where a living will and a revocable trust come into play.
“One should also consider drafting a living will, which allows you to appoint someone to act as your representative when you can no longer make health care decisions for yourself. This is not a topic most people want to think about, but they should,” Prabhakar added, pointing out end-of-life care as an important example.
“Finally, there exists a common estate planning document called a revocable trust, which people use to avoid their estate having to go through probate court. A person usually appoints themselves as trustee and transfers their assets to the Trust. They receive the benefits of the assets while alive and, upon the person’s death, the document then directs that another named individual becomes the trustee, who must divide the property according to the terms of the revocable trust.”
“As a principal law clerk to a probate judge in New York City for many years, I saw numerous cases where a young person who had no assets died as the result of an accident and their estate recouped millions of dollars in lawsuits for negligence. A young person may want to perhaps have a will to benefit only one of their parents, or a specific sibling, or a charity with whose mission they strongly agree,” Prabhakar shared. “This is all to say that having a will protects your assets, loved ones, and any charities which you care about.”
Another major misconception about estate planning that many people have is that it is only for wealthy individuals, Prabhakar disagrees, adding, “No one is too poor to have an estate plan. Estate planning is about taking control of decisions that affect the wealth you have earned in life and protecting those whom you consider to be your loved ones.”
“Do they care to help you create your estate plan exactly the way you want it done or are they set in their recommendations to all their clients? Do they take drafting your living will as seriously as drafting the will leaving your property?” Prabhakar asked. “It is important to have your ears perked up not just to the attorney’s intelligence, but their emotional intelligence as it concerns empathy.”