Though there are estates that will require some complex plans, the majority of people are going to have to concern themselves with two major issues. The first one is very obvious: you must execute a vehicle or vehicles of asset transfer. The most common way to leave your property to your loved ones is through the utilization of a last will.
Though the last will is the most widely used vehicle of asset transfer, it is not always the best one. When you use a last will your estate must pass through the process of probate, which can be lengthy, expensive, and public. Many people choose to avoid probate for these reasons, and the most common way of doing so is through the creation of a revocable living trust.
With these trusts you appoint a trustee, which can sometimes be a bank or trust company, who will administer distributions to your beneficiaries after your death in accordance with your wishes. These asset transfers take place outside the process of probate, and the creation of the trust provides some asset protection for your beneficiaries as well.
In addition to facilitating the transfer of assets, the fundamental estate plan will also include an incapacity planning component. You can protect yourself through the execution of a durable financial power of attorney and a durable power of attorney for health care. With these documents you empower representatives of your choosing to make decisions on your behalf should you become unable to do so due to incapacitation.
These are a couple of the basics, but in the end the best way to truly demystify the process of estate planning is to consult with an experienced estate planning attorney. This type of communication is invaluable, and you will invariably feel a weight lifted off your shoulders when you exit your attorney's office with a solid estate planning strategy having been decided upon.
The field of estate planning contains many different legal instruments that most people have never heard of, so it can be kind of confusing when you start to do your research. On the other hand, there are some estate planning tools that are commonly used that most people have heard of that exist in some variations. As they say, a little bit of knowledge can sometimes lead to misconceptions, so we would like to clear up the difference between some of the basic terms that are often confused.
Everyone has heard of the last will, which is of course the most commonly used vehicle of asset transfer when a person dies. Many individuals are aware of the fact that there is an alternative to the will that prepares assets for eventual distribution while you are still alive. Since the last will is a vehicle of asset transfer, when some people hear the term "living will" they assume that this must be the way that you prepare assets for distribution while you are alive, but this is not the case.
A living trust is the vehicle of asset transfer that is executed while you are still alive. You can actually serve as both the trustee and the beneficiary while you are living so that you retain full control of the resources. But you name secondary beneficiaries and a successor trustee who will distribute the assets to your beneficiaries upon your death or incapacitation in accordance with your wishes.
The living will, on the other hand, is an advance health care directive. It is used to express your preferences with regard to the medical procedures you would accept and those that that you would prefer to deny in the event of your incapacitation. The matter of being kept alive through the utilization of life support systems is at the core of most living wills.
While no one likes to think about a time when they're no longer around, we all secretly wonder the same things: Will my spouse have enough to live on when I'm not there? Will I be able to leave a legacy for my children? Will the family home stay in the family, or will it have to be sold to pay off creditors and taxes? This is why estate planning is important and necessary.
Estate planning is simply a way to protect your assets and your loved ones by creating legally valid documents that address a variety of concerns. Do you have a child that has special needs? Then a special needs trust might be the solution for you. This type of trust allows you to provide for a disabled or incapacitated dependent without affecting their eligibility for government-assistance programs. This trust can also be a component of a larger family trust, often called a Living Trust, that shields your assets from probate, minimizes taxes and even provides a way to give your heirs incentives for going to college, getting a job and similar personal growth accomplishments.
A good estate plan will also include a Powers of Attorney which are documents designed to designate someone to step in and speak on your behalf in financial and medical matters. In addition, you should have Advance Directives (a living will and health care power of attorney) that tells your healthcare providers how to handle life support and resuscitation matters.
In a nutshell, your estate plan is something you really can't do without and it's important that you have all of the key essentials. Hire an estate planning attorney! Anderson, Dorn & Rader, Ltd. has experienced estate planning lawyers that you can trust.
A living trust and living will might sound similar but actually, the two are quite different.
A living trust is designed to help protect and distribute your assets. The assets are actually titled in the name of the trust and depending upon the terms of your trust, you may have complete control or hand the management of the trust over to someone else. Upon your death, beneficiaries receive the assets according to your terms in the trust. A method of avoiding probate, it’s a way of bypassing the lengthy and often expensive court process of distributing your assets.
A living will, however, is a legal way of informing your physician what you want done in case of a terminal condition. It’s used when you can no longer communicate your wishes due to an injury or illness that leaves you incapacitated. Your living will should be accompanied by a health care power of attorney. This document designates a person to speak on your behalf and relay your wishes with regard to certain medical treatments and decisions. It might relate to resuscitation, feeding tubes, etc. These "advance directives" also give loved ones peace of mind knowing that they are doing what you would have wanted.
It’s highly recommended that everyone draw up advance directives including a living will and a health care power of attorney, whereas a living trust is especially beneficial for those with a certain level of assets. To get help with a living will or living trust, a good estate planning attorney is your best bet.