When we think about estate planning, we often focus on who will inherit what and how to ensure our loved ones are cared for. But another important part of the process is understanding how taxes may affect your estate and your beneficiaries. Without proper planning, a significant portion of your estate could go to taxes rather than to the people and causes you care about most. That’s why incorporating tax efficiency into your estate plan is essential — not just for high-net-worth individuals, but for anyone with real estate, retirement savings, or family heirlooms they want to pass on.

Let’s explore the key tax considerations that can influence your estate plan and how we can take proactive steps to reduce the burden.

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Overview of Federal Estate and Gift Tax Thresholds

The federal government imposes an estate tax on the value of assets transferred upon death, but only if your estate exceeds a certain threshold. As of 2025, the federal estate tax exemption is approximately $13 million per individual (subject to legislative changes). That means most estates won’t owe federal estate tax — but those that do can face rates as high as 40% on the portion that exceeds the exemption.

In addition to the estate tax, the federal government also has a gift tax, which applies to transfers made during your lifetime. However, there are key exclusions that can be used strategically:

• Annual gift tax exclusion: You can give up to $18,000 per recipient per year (2025 amount) without triggering gift tax.

• Lifetime gift tax exemption: Gifts exceeding the annual exclusion count against your lifetime limit, which is unified with the estate tax exemption.

Understanding how these exemptions work — and how lifetime gifts affect your estate — is a crucial part of long-term planning.

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State-Level Estate Taxes and How They Might Affect Your Plan

While many estates fall below the federal threshold, some states impose their own estate or inheritance taxes — and these can kick in at much lower levels.

If you live in a state like New York, Massachusetts, or Connecticut, your estate could be taxed even if it’s far below the federal exemption. These state estate tax exemptions often range from $1 million to $5 million, and the rates vary by state.

Here’s how this might impact your plan:

• Residency matters: Estate tax is generally determined by where you legally reside, but owning property in multiple states may subject your estate to additional scrutiny or tax filings.
  
  
• Relocation planning: For some, moving to a state without an estate tax later in life can significantly reduce the overall tax burden — but it’s important to establish clear residency for it to count.
  
  
• Proactive strategies: Techniques like gifting during your lifetime or using specific types of trusts can help minimize the state estate tax impact.

If you’re unsure whether your state imposes these taxes, or how your current estate would be affected, this is an area where legal guidance can really make a difference.

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How Trusts Can Help Manage or Reduce Tax Burdens

Trusts are powerful estate planning tools that can help reduce estate taxes, avoid probate, and control how assets are distributed after your death. When structured strategically, certain types of trusts offer meaningful tax advantages:

• Credit Shelter Trusts (also known as Bypass Trusts) allow couples to maximize their combined estate tax exemptions.

• Irrevocable Life Insurance Trusts (ILITs) remove life insurance proceeds from your taxable estate, while still providing for beneficiaries.

• Grantor Retained Annuity Trusts (GRATs) can be used to transfer appreciating assets while minimizing gift taxes.

• Charitable Remainder Trusts (CRTs) allow you to generate income during your lifetime and donate the remainder to charity, often resulting in both income and estate tax benefits.

The right trust structure depends on your specific goals, assets, and family dynamics. By incorporating trusts into your estate plan, we can ensure more of your legacy stays intact for your loved ones.

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Using Charitable Contributions for Tax-Efficient Planning

Philanthropy isn’t just a way to give back — it can also be a strategic component of your estate plan. Charitable giving can reduce the taxable value of your estate while supporting causes that matter to you.

Here are a few common approaches:

• Charitable Bequests: Leave a gift to a nonprofit in your will, reducing the size of your taxable estate.

• Donor-Advised Funds (DAFs): Make a charitable donation now, receive an immediate tax deduction, and distribute the funds to charities over time.
  

• Charitable Trusts: As mentioned above, CRTs and Charitable Lead Trusts (CLTs) can provide both income and estate tax benefits while supporting charitable organizations.

By aligning your estate planning with your charitable values, you can leave a meaningful legacy and reduce your family’s future tax burden.

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Strategies for Minimizing Taxes on Inherited Assets

It’s not just your estate that may be taxed — your beneficiaries could also face tax implications based on the type of assets they inherit. That’s why we focus not only on transferring wealth, but doing so in the most efficient way possible.

Some strategies include:

• Taking advantage of step-up in basis: Most inherited assets like stocks or real estate receive a step-up in cost basis, which can eliminate capital gains taxes if sold soon after inheritance.
  

• Using Roth IRAs for tax-free growth: Unlike traditional IRAs, Roth IRAs allow for tax-free withdrawals by heirs, which can be a significant advantage.

• Structuring inheritances thoughtfully: For example, it may be better to leave tax-deferred accounts to beneficiaries in lower income brackets to reduce income taxes on required distributions.

Reviewing your assets and how they’re titled — and understanding the tax consequences of each — helps ensure your beneficiaries aren’t left with an unexpected bill.

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Proactive Planning Protects Your Legacy

Understanding how taxes affect your estate plan is essential to making smart, informed decisions that protect your assets and your family’s future. The good news is that with proactive strategies and personalized guidance, it’s possible to significantly reduce or even eliminate certain tax burdens.

At Donohue, O’Connell & Riley, we help clients build tax-efficient estate plans that align with their financial goals and personal values. Whether you're just starting to plan or updating an existing estate plan, we're here to guide you through the process with clarity and care.

Contact Us to schedule a consultation and take the next step in protecting your legacy.

When we think about estate planning, we often focus on distributing assets or naming heirs. But for many families, an estate plan is just as much about ensuring care for the people who depend on us most—aging parents, disabled relatives, or even minor children. Thoughtful legal and financial planning can ease the burden on caregivers and provide protection and stability for dependents, both now and in the future. Whether you’re currently a caregiver or preparing for the possibility, estate planning gives you the tools to manage responsibilities with clarity and compassion.

Legal Planning for Aging Parents or Disabled Loved Ones

Caring for an elderly parent or a loved one with a disability can involve a host of decisions—from managing their medical care to handling finances and long-term housing. Incorporating this role into your estate plan helps ensure those needs continue to be met, even if you're no longer able to provide support yourself.

Key legal tools include:

• Advance directives and healthcare proxies for the person receiving care, so their medical wishes are clearly documented.
  

• Powers of attorney, which allow you or another trusted individual to manage legal and financial matters on their behalf.
  

• Special needs trusts, which can protect eligibility for public benefits like Medicaid or SSI while providing supplemental support.
  

• Guardianship designations, particularly when the person in your care may not be able to make legal decisions on their own.
  
  

Legal planning provides structure—and peace of mind—for both caregivers and dependents. It’s about ensuring no one is left navigating complex decisions without clear authority or direction.

Using Powers of Attorney and Guardianships to Manage Responsibilities

When caregiving is part of your life—or may become part of it—establishing clear authority through legal documents is essential. Powers of attorney and guardianship arrangements are two important tools that help manage responsibilities smoothly.

• A durable power of attorney gives someone you trust the authority to act on your behalf in financial and legal matters, even if you become incapacitated. This can be especially important if you're the caregiver and want to ensure someone else can step in seamlessly if needed.
  

• A healthcare proxy or medical power of attorney authorizes someone to make medical decisions for you or your loved one in the event you're unable to do so.
  

• In situations involving individuals with significant disabilities, legal guardianship may be necessary to manage decisions over time. This is often used when the person receiving care is unable to make or communicate informed decisions.
  
  

Each of these documents allows for continuity and clarity—both of which are critical when caring for someone else. Without them, even everyday tasks like paying bills, accessing medical records, or coordinating care can become difficult, if not impossible.

 

Financial Tools Like Trusts and Benefit Coordination

Beyond legal documents, estate planning offers several financial strategies to help caregivers manage costs and provide long-term security for dependents. One of the most flexible and protective tools is a trust.

Trusts can:

• Set aside funds for a loved one’s ongoing care and living expenses
  

• Appoint a trustee to manage assets if you’re unable or unavailable
  

• Provide for multiple beneficiaries over time, with clear instructions
  

• Preserve eligibility for important public benefits through special needs trusts
  

• Avoid probate, ensuring faster and more private access to necessary resources
  

Coordinating financial planning with benefit programs like Medicaid, Social Security, or veterans' benefits is also crucial. A poorly structured inheritance could unintentionally disqualify someone from the assistance they rely on. That’s why we take a holistic approach—ensuring your estate plan and financial strategy support, rather than jeopardize, your loved one’s well-being.

Planning for Continuity of Care in Your Absence

One of the most important aspects of estate planning for caregivers is preparing for the unexpected. If something were to happen to you, would your loved one’s care continue without disruption?

To ensure continuity:

• Clearly outline your caregiving role in writing, including routines, medical needs, medications, and preferred providers
  

• Identify and legally empower backup caregivers or decision-makers
  

• Make arrangements for short-term care while longer-term plans are put in place
  

• Fund a trust or savings account that can be accessed quickly to avoid delays in care
  

• Consider housing options, especially for individuals who need a stable living environment
  

By planning ahead, you help avoid crises and ensure your loved one isn’t left in a vulnerable position.

Communicating Responsibilities Clearly to All Involved Parties

Even the most carefully crafted plan can fall short if family members and caregivers aren’t on the same page. Clear communication plays a key role in reducing confusion and conflict, especially during emotionally charged times.

Here’s how to keep everyone informed:

• Hold family meetings to share your wishes, explain responsibilities, and introduce key documents
  

• Name roles explicitly in your plan—who will serve as power of attorney, trustee, guardian, or healthcare proxy
  

• Share access to important records, either physically or digitally, so others can step in if needed
  

• Review your plan periodically with all involved parties to ensure everyone understands their role
  
  

This kind of transparency not only protects your loved ones—it also helps prevent disputes, ensures smoother transitions, and reinforces your values and intentions.

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Peace of Mind for Everyone You Support

Being a caregiver is a profound responsibility—and it’s one that deserves thoughtful legal and financial support. Through estate planning, we can help you build a framework that protects your loved ones, empowers trusted individuals, and ensures care continues even in your absence. Whether you’re supporting an aging parent, a child with special needs, or anyone else who depends on you, having a plan in place brings confidence and relief.

Let’s work together to safeguard the people who matter most. Contact Us to schedule a consultation and take the next step toward securing their future—and your peace of mind.

Estate planning isn’t a one-time task — it’s an ongoing process that should reflect the changes in your life, family, and financial situation. As our lives evolve, so should the legal documents that protect our wishes and assets. Keeping your estate plan up to date is essential to ensure your plan functions as intended when it’s needed most. Whether you’ve just welcomed a new child, experienced a divorce, or purchased a second home, timely updates can help avoid costly mistakes, legal disputes, and unintended outcomes.

As attorneys experienced in estate planning, we’ve seen firsthand how small oversights in outdated documents can create big challenges for families. The good news is that knowing when to revisit your plan—and doing so proactively—can provide peace of mind and long-term protection for you and your loved ones.

Life Events That Should Trigger an Estate Plan Review

Certain personal milestones or changes in your family, finances, or health should automatically signal that it’s time to update your estate plan. These events often have legal and financial implications that can affect how your assets are distributed or how your wishes are carried out. Some of the most common life events that warrant an estate plan review include:

• Marriage, divorce, or remarriage
  
  
• Birth or adoption of a child or grandchild
  
  
• Death or incapacity of a spouse, beneficiary, executor, or trustee
  
  
• Significant changes in financial circumstances, such as buying or selling property, receiving an inheritance, or starting a business
  
  
• Relocation to a different state, especially if estate laws differ
  
  
• Diagnosis of a serious medical condition or long-term care need

Each of these events can impact how your will, trust, power of attorney, and other documents function. Updating your plan ensures that it remains aligned with your current intentions and needs.

Common Mistakes From Outdated Documents

Failing to update an estate plan can lead to unintended consequences—some of which may not be discovered until it’s too late. Outdated documents can leave loved ones unprotected, create confusion, or even result in your assets being distributed in a way you never intended.

Here are just a few examples of what can go wrong:

• Outdated beneficiaries: Naming a former spouse or someone who has passed away as a beneficiary can cause delays, disputes, or disqualification of benefits.
  
  
• Mismatched fiduciaries: Executors or trustees who are no longer available—or who are no longer the right fit—can complicate the administration of your estate.
  
  
• Gaps in guardianship designations: If your family has grown or changed, failing to update guardianship provisions for minor children could lead to court intervention.
  
  
• Incorrect property titling: Joint ownership, payable-on-death accounts, or real estate held in trust must reflect your latest wishes to ensure smooth transfers.

Keeping your documents current is one of the simplest ways to protect your legacy and spare your loved ones unnecessary legal and emotional stress.

How Frequently to Revisit Your Plan Even Without Big Changes

Even if no major life events have occurred, it’s wise to review your estate plan on a regular basis. We typically recommend revisiting your documents every three to five years, just to make sure they still reflect your current goals and legal landscape. Minor changes in your finances, relationships, or personal values may not seem significant at first — but over time, they can affect the effectiveness of your plan.

Regular reviews help you catch small issues before they become big ones. Maybe your named healthcare agent has moved out of state, or you’ve opened new accounts that aren’t yet titled in the name of your trust. A quick review can help ensure everything is still working in harmony and reduce the likelihood of surprises later on.

Coordinating Updates Across All Estate Planning Tools

When updating your estate plan, it’s important to think holistically. Your will, trusts, powers of attorney, and healthcare directives should all work together — and those documents should align with your financial accounts, property titles, and beneficiary designations.

A few important reminders:

• If you change your will but not your IRA beneficiary, the account may still go to an outdated recipient.
  
  
• If you revise your trust but forget to retitle new assets into it, those assets may still go through probate.
  
  
• If your financial power of attorney doesn’t reflect your current wishes, it may not provide the right authority in an emergency.

Coordinated planning ensures your intentions are carried out clearly and completely across all areas of your life.

Working With an Attorney to Ensure Alignment With Current Laws

Laws around estate planning, taxation, and healthcare decision-making can change — and sometimes, even subtle legal shifts can affect your documents. Working with an experienced estate planning attorney gives you confidence that your plan remains legally sound, up-to-date, and personalized to your situation.

Our role is to help you stay informed, make timely adjustments, and ensure your entire plan reflects current best practices and statutory requirements. Whether you need help identifying gaps or want to explore options for trusts, asset protection, or tax strategies, we’re here to guide you every step of the way.

Stay Prepared by Keeping Your Plan Current

Your estate plan should evolve along with your life. By reviewing and updating your documents regularly — and after significant life changes — you protect yourself and your loved ones from unnecessary stress and legal complications. Whether it’s a simple update or a full review, staying proactive ensures your wishes are clearly documented and legally enforceable.

If you’re unsure whether your plan still reflects your needs, we can help. Contact us to schedule a consultation and keep your estate plan working for you and your family.

Estate planning is about more than drafting a will or setting up a trust—it’s about ensuring that the people you care about can access the right information when they need it most. Even the most carefully crafted estate plan can fall short if your documents are disorganized or difficult to find. Whether you’re just getting started or revisiting your plan after a life change, organizing your estate planning paperwork is a vital step toward protecting your wishes and reducing stress for your loved ones.

At our firm, we often work with families who face unnecessary challenges simply because documents weren’t in the right place—or weren’t there at all. By taking the time to thoughtfully organize your records, you give your family and chosen representatives the tools they need to act quickly and confidently on your behalf.

Why Document Organization Matters for Your Estate Plan

Estate planning isn’t just about legal documents—it’s about creating clarity and easing the burden during emotionally difficult times. Disorganized records can result in delays, confusion, legal complications, or even the unintended loss of assets. When important documents are incomplete or inaccessible, your loved ones may be left to guess about your intentions, or worse, face unnecessary court proceedings.

Some of the key reasons to keep your estate planning documents organized include:

• Faster access during emergencies: Healthcare decisions or financial matters may require immediate action.
  
  
• Reducing legal delays: Clear documentation helps minimize probate complications and legal disputes.
  
  
• Supporting your executor or agent: Giving your chosen representative clear instructions and records ensures your plan is executed smoothly.
  
  
• Preserving your legacy: An organized plan makes it more likely your intentions are carried out as you envisioned.

By staying organized, you empower your family with peace of mind and the tools to carry out your wishes efficiently.

Key Legal, Financial, and Medical Documents to Include

One of the most important parts of estate planning is knowing which documents to gather and keep updated. Your estate planning file should go beyond just your will—it should be a comprehensive resource covering your legal, financial, and healthcare affairs.

Here’s a checklist of essential documents to include:

• Legal Documents: Last will and testament, revocable or irrevocable trusts, durable power of attorney, healthcare proxy, living will, HIPAA authorization.
  
  
• Financial Records: Deeds to property, titles for vehicles, retirement and investment account statements, bank account information, insurance policies (life, long-term care, etc.), recent tax returns, and business ownership documents (if applicable).
  
  
• Medical Information: Advance healthcare directives, insurance cards, list of current medications, doctors’ contact information, and any relevant medical history that a healthcare agent may need.
  
  
• Personal Information: Birth certificates, Social Security cards, marriage or divorce documents, military service records, and contact lists for key family members and advisors.

By assembling these documents in one place, you’re making it easier for your executor, trustee, or healthcare agent to act swiftly and in line with your values and preferences.

Tips for Storing, Labeling, and Updating Your Records

Once you’ve gathered your documents, the next step is creating a reliable system for storage and maintenance. This doesn’t need to be complicated—but it does need to be consistent.

Consider the following best practices:

• Use clearly labeled folders: Separate legal, financial, medical, and personal records into distinct categories so they’re easy to find.
  
  
• Create a master inventory list: Maintain a document that lists all items in your estate planning file and their locations.
  
  
• Review annually: Set a reminder to update documents and remove any that are no longer relevant, such as closed accounts or outdated beneficiary forms.
  
  
• Include instructions: A brief note explaining how to use each document or who to contact for help can make a big difference to someone handling your affairs.

Staying organized doesn’t just help your family later—it also makes it easier for you to keep your estate plan current and effective.

Sharing Access with Your Executor or Trusted Individuals

Even the most thorough estate plan is of little value if no one knows where it is or how to access it. It’s essential to ensure that your executor, trustee, or healthcare agent knows where your documents are stored and how to retrieve them.

Some key points to consider:

• Inform your agents: Let them know they’ve been named in your documents and explain their responsibilities.
  
  
• Provide copies or access: Depending on your comfort level, you can give physical copies or provide written instructions on where to find the originals.
  
  
• Store a backup: Keep a copy with your attorney or in a secure secondary location, like a locked file at home or a trusted family member’s residence.

Good communication prevents confusion and empowers your representatives to step in confidently when the time comes.

Digital vs. Physical Storage: Pros, Cons, and Best Practices

As we continue to rely more on digital tools, many people are choosing to store their estate planning documents electronically. Each method—digital or physical—has advantages and considerations.

Physical Storage Pros:

• Tangible, easy to locate with clear instructions
  
  
• No risk of digital breaches or access issues
  
  

Physical Storage Cons:

• Vulnerable to loss, fire, or water damage
  
  
• May be harder to share with multiple people
  
  

Digital Storage Pros:

• Accessible from multiple locations
  
  
• Easy to duplicate and share securely
  
  

Digital Storage Cons:

• Requires secure encryption and password management
  
  
• May not be accepted by all institutions in place of originals

Ideally, we recommend a hybrid approach: maintain hard copies of original signed documents in a secure location, and store digital backups using encrypted, reputable platforms. Make sure someone you trust knows how to access both.

Make Organization Part of Your Estate Planning Strategy

A well-organized estate plan does more than protect your assets—it supports the people you care about during a time when they need clarity and direction most. By taking the time to store your documents thoughtfully and share access with your trusted agents, you reduce confusion and stress while helping ensure your final wishes are honored.

If you’re not sure where to begin or want help reviewing your current plan, we’re here to guide you through the process. Our team can help you create, update, and organize your estate planning documents with confidence and care.

Contact us today to take the next step toward a clear and secure future.

Life doesn’t always go as planned, and while we may hope to never face a medical emergency or period of incapacity, the reality is that these events can happen to anyone at any time. That’s why estate planning isn't just about what happens after we pass—it’s also about protecting ourselves and our families while we're still living. Preparing for incapacity ensures that trusted individuals can step in to manage our medical and financial decisions if we're ever unable to do so ourselves.

At Donohue, O’Connell & Riley, we guide individuals and families through this important aspect of estate planning. Whether you're creating your first plan or updating existing documents, taking proactive steps today can protect your loved ones from uncertainty and prevent unnecessary stress down the road.

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Why Incapacity Planning Matters at Any Age

Many people assume that incapacity planning is only relevant for seniors, but unexpected illness, injury, or accidents can strike at any age. Without a plan in place, your loved ones could be forced to seek court approval to make medical or financial decisions on your behalf—often during already stressful circumstances.

Here are a few common scenarios where incapacity planning can make a critical difference:

• A car accident leaves you unconscious and unable to communicate medical decisions
  
  
• A temporary illness requires hospitalization and time away from managing your finances
  
  
• A chronic condition progresses, limiting your ability to handle daily responsibilities

In each of these situations, having legally authorized agents and clear instructions ensures that your healthcare and financial matters are handled according to your wishes—and spares your family from guesswork or legal battles.

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Key Documents: Living Wills, Healthcare Proxies, and Durable Powers of Attorney

Incapacity planning relies on a few essential legal documents that work together to provide protection and clarity. Each plays a distinct role, and together, they form the backbone of a solid incapacity plan:

• Living Will: A living will outlines your preferences for medical treatment in the event you're unable to speak for yourself. This may include instructions about life-sustaining treatments, resuscitation, feeding tubes, and organ donation.
  
  
• Healthcare Proxy (Medical Power of Attorney): This document allows you to appoint a trusted individual—known as your healthcare agent—to make medical decisions on your behalf. Unlike a living will, which addresses specific treatments, the healthcare proxy gives your agent the flexibility to respond to a variety of medical scenarios.
  
  
• Durable Power of Attorney: A durable power of attorney authorizes someone to manage your financial and legal affairs if you become incapacitated. This includes paying bills, accessing bank accounts, managing investments, and signing legal documents.

Each of these documents should be tailored to your unique situation and reviewed regularly to reflect your current wishes. We recommend working with an experienced estate planning attorney to ensure all documents meet legal requirements and function as intended when needed most.

Choosing the Right Healthcare Agent and Communicating Your Wishes

Selecting a healthcare agent is a deeply personal decision that requires trust, clarity, and communication. Your agent should be someone who understands your values, is willing to advocate for your preferences, and is capable of making informed decisions under pressure. This could be a spouse, adult child, close friend, or another trusted individual.

Once you’ve selected your agent, it’s critical to have open conversations about your medical values and expectations. Consider discussing:

• Your preferences around life-sustaining treatment and resuscitation
  
  
• What quality of life means to you
  
  
• Religious or spiritual beliefs that may guide your care
  
  
• Any specific wishes regarding long-term care or end-of-life decisions

While your legal documents provide the framework, these personal conversations give your agent the context they need to act in your best interest.

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Planning for Temporary Incapacity vs. Long-Term Disability

Incapacity doesn’t always mean a permanent loss of decision-making ability. Sometimes, it’s temporary—like recovering from surgery or an illness. In other cases, it could be the result of a long-term or progressive condition, such as dementia or a traumatic brain injury.

Your incapacity plan should account for both:

• Temporary Incapacity: Your agent can step in to handle short-term financial and medical needs while you recover, then return control to you once you’re well again.
  
  
• Long-Term Disability: If the incapacity is ongoing, your plan should include clear guidance on managing long-term care, housing, and ongoing financial responsibilities.

We help clients prepare flexible plans that adapt to both short-term and long-term scenarios, ensuring continued protection regardless of how circumstances unfold.

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How Incapacity Planning Fits Into a Complete Estate Plan

Incapacity planning is an essential piece of a well-rounded estate plan. It works alongside other documents—like your will, trust, and beneficiary designations—to protect you during your lifetime and ensure a smooth transition of assets after death.

Here’s how it all fits together:

• During Life: Your powers of attorney and healthcare proxy empower your chosen agents to manage your affairs if you’re unable to do so yourself.
  
  
• After Death: Your will and/or trust dictate how your assets are distributed and who will be responsible for carrying out your final wishes.

When all parts of your estate plan work in harmony, you gain peace of mind knowing that your affairs are covered—no matter what life brings.

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Take Control of Your Future Today

Incapacity can happen suddenly and without warning, but the good news is that it’s entirely possible to plan ahead. By putting the right legal protections in place, you’re not only preserving your dignity and autonomy—you’re also giving your loved ones the gift of clarity and guidance during uncertain times.

At Donohue, O’Connell & Riley, we help clients at every stage of life prepare thoughtful, legally sound estate plans that include incapacity planning. If you’re ready to take the next step toward protecting yourself and your family, we invite you to contact us to schedule a consultation. Let’s work together to build a plan that gives you confidence for the road ahead.