If you have ever found yourself wondering why is estate planning important, consider all the legal fees and time spent in court you can spare your family members by simply planning ahead.
Comprehensive estate planning involves thinking ahead and making plans for all of your assets and debts so that your affairs can be handled easily.
These documents are an excellent starting point for making sure your family and loved ones receive your assets as smoothly as possible.
A trust can be described as a legal entity that holds your assets on your behalf. You can place real estate, savings accounts, vehicles, and more into a trust. Trusts are useful for protecting your assets, transferring them to beneficiaries, and even getting tax benefits.
Trusts can be divided into two categories: irrevocable and revocable. Revocable trusts are popular for estate planning because they can be altered at any time. You can cancel the trust, move property in and out, and change the beneficiaries as needed.
In this situation, the person who creates the trust is the person who owns the property in a trust. You don’t need to worry about losing control of your assets.
Irrevocable trusts, on the other hand, cannot be altered easily. You’ll need permission from the beneficiaries to change the terms of this type of trust. There are unique benefits to irrevocable trusts, including tax breaks, asset protection, and avoiding probate.
However, irrevocable trusts involve transferring ownership of your assets to the trust itself. Doing so can protect your assets from creditors and provide a tax shelter, but it can also be inconvenient in some situations.
Modern irrevocable trusts can be drafted with provisions that make them easier to manage. An estate attorney can help you determine what kind of trust is best for your needs, and help you create one tailored to your circumstances.
Special needs trusts are designed with your disabled family members in mind. You can use them to make sure the beneficiary has access to funds when necessary without losing their access to Medicaid or government benefits.
Your Certificate of Trust is a document that proves the existence of your trust, and it gives the trustee permission to take action on the assets held in the trust.
Your trustee is the person or entity that manages your trust, and they may have to buy or sell property on your behalf. This document proves that they have the right to do so, and they’ll have to present it to third parties like banks.
Your Certificate of Trust should be drafted by an estate planning attorney and contain important information about the trust.
It will verify the existence of the trust, list the trust ID number, and show when it was created. The certificate will also list the grantors, the trustees, and the trustees of the power. The specifics can vary by state, but it won’t include any private information.
When you plan to include real estate in a trust, you’ll need to sign a new deed that transfers ownership. This form is called a grant deed, and it includes the following information:
Once you’ve completed the paperwork, you can have it notarized and file it with your local courthouse. Transferring property can have other legal and financial effects, such as on your taxes, so it’s a good idea to consult with a lawyer during this step.
Failing to complete this step can wreak havoc on your estate plans, and correctly transferring property to your trusts is an important part of estate planning. However, you can make plans that will capture any property that slips through the cracks by creating a pour-over will.
A will is one of the guiding documents of any estate plan, and it’s where you can list your property, dictate your final wishes, and more. A basic living will checklist might include assigning a power of attorney and outlining your desires for end-of-life care.
A pour-over will is designed to make sure your assets that aren’t already in a trust are automatically transferred into it after your death. In the will, you’ll give instructions that any assets not in your trust when you die should be moved into it.
There are several advantages to a pour-over will, including the simplicity of having a catch-all for your assets. Another is that a pour-over will is comprehensive and encompasses all your assets so that nothing is forgotten.
Finally, it affords you more privacy. You can set the terms of inheritance and list the beneficiaries in your trust document instead of in your will. While wills are public records, trusts are not. A pour-over will help you keep the details of your assets and beneficiaries private.
A power of attorney is someone who is designated to make decisions on your behalf if you become incapacitated.
There are several categories, including General Power of Attorney that allows someone to make legal, financial, and healthcare decisions for you. A financial power of attorney is limited to the area of finances.
Financial power of attorney selects someone who will manage your finances. They’ll pay your bills, taxes, and manage your money. It’s important to have someone in this role so that if you get into an accident or have an illness, you won’t be facing a financial or legal mess because you stop paying your bills.
You can assign someone as your durable financial power of attorney, which means that they’ll be able to act on your behalf either until you die or until you revoke their power.
Much of your estate planning will be centered around your finances and making things accessible to your beneficiaries. However, some documents are for your own benefit, like your advanced directives.
Your health care directives provide a written record of the medical care you do and do not want in care of illness or injury. The medical staff will refer to this document so they can work according to your wishes.
For example, you can include Do Not Resuscitate orders or Do Not Intubate orders. Organ and tissue donation is another common directive. You can state whether or not you’ll allow donations after your death.
It’s also possible to assign a power of attorney specifically for health care. It’s important to choose someone who you trust and who understands your preferences. You can put limits on the kinds of decisions this person is allowed to make, as well.
Estate planning is important for both your loved ones and your own end-of-life care. Parker Law Offices can help you create a comprehensive plan that ensures your family can manage your final affairs as smoothly as possible, making things easier for them during a difficult time.
Comprehensive estate planning determines who will inherit your assets after your death, as well as the timing and manner of the transfer. The timing and character of these "distributions" may be affected by a variety of factors, such as economic conditions (but not limited to):
- The ages of the beneficiaries;
- The fiscal maturity of the beneficiaries (or lack thereof);
- The stability (or instability) of the beneficiaries’ marriages;
- The disabilities of any beneficiaries; and
- The need for a beneficiary to have protection from their own creditors.
The following are six of the many possible components of a comprehensive estate plan.
1. Last Will and Testament
3. Power of Attorney
4. Healthcare Directives
5. Beneficiary Designations
Make sure you have the right legal documents in place to ensure that all your financial and healthcare needs and wishes are met, even if you are not in a position to make decisions for yourself. Name responsible and trusted individuals to make decisions for you should the need arise.