Estate Planning
What is estate planning?
Estate planning is a process that allows you to preserve your wealth and address your future needs in the event that you become incapacitated. An estate plan instructs others on how you wish to distribute assets upon your death or disability. It often involves strategies to minimize estate taxes, protect beneficiaries from creditors, and specify steps in order to coordinate your affairs. A proper estate plan should include directions regarding health care matters if you unexpectedly cannot care for yourself. Wills and trusts are the most commonly used documents for estate planning.
What is a will?
A will is a legal document that instructs the probate court on who you wish to nominate as the executor of your estate and how you wish your assets to be distributed upon your death. A will only becomes effective upon a person’s death and not beforehand. Unlike a trust, a will must be probated in court.
What is a trust?
A trust is a legal document that gives specific directions to a named a trustee about how to manage estate affairs and distribute assets. There are many different types of trusts, but the most common type is called a Revocable Living Trust.
A revocable living trust can be created and administered for your benefit while you are still living. Assets can be placed into the name of the trust, so that upon your death everything in the trust can be transferred to your beneficiaries without delay or supervision of probate court. You are able to amend or even terminate a revocable living trust during your lifetime. However, upon your death a revocable living trust becomes irrevocable and the terms are solidified forever. Another benefit of creating a trust is that the document remains private, avoiding probate and the fees and costs associated with probate all together.
What are the differences between and will and a trust?
A living trust is a flexible legal entity that can hold title and ownership of your assets. A living trust also allows you to remain in complete control of your assets during your lifetime. By creating a living trust, your beneficiaries can avoid probate when you die or become incapacitated. A will cannot own your assets and your beneficiaries/heirs must go to probate court in order to manage and distribute your estate assets.
What does an estate include?
- Real property (your home, investment properties, etc.)
- Tangible personal property
- Separate Property
- Interest in any business
- Your portion of joint accounts
- Retirement accounts
- Life insurance policies
- Property owned by a trust, over which you have significant control
Do I need an estate plan?
Yes. Whether you are young or old, or if your estate is large or small – most people can benefit from creating an estate plan. You should make the important decisions about who will manage your assets and make health care decisions for you in the event that you are unable to yourself.
What is an Advance Health Care Directive?
An Advance Health Care Directive declares who can make health care decisions if you are unable to make them for yourself. A health care directive includes language regarding life-sustaining treatment, organ donation, and end of life care choices. Additionally, it states whether you want to receive pain medication or receive medical resuscitation to prolong your life in the event you become terminally ill.
What is Power of Attorney?
A Power of Attorney is a document that authorizes one or more persons to act on your behalf in managing your financial affairs if you become incapacitated. The holder of your power of attorney has the legal power to make binding decisions that affect your money, property, and other assets, including, paying your bills and spending your money.
A Power of Attorney can become effective upon signing or when a person loses the ability to make his or her own financial decisions. It may preclude the need for a conservatorship in the even that you are deemed incapacitated. It is automatically terminated when the individual who created the power of attorney dies. This legal document can be revoked at any time by giving proper notice.
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