Estate planning has two important purposes: (1) to ensure your property is distributed according to your wishes with minimal consequences; and (2) it allows you, and not the state, to determine who will look after you and your property in the event that you become disabled and are no longer capable of making these decisions.
Estate and Charitable Planning
Estate and Charitable Planning – Questions/Answers
- 1: Do I need a will?
Probably, yes. A Last Will and Testament, also called “will” for short, governs the disposition of your probate assets upon your death. Your will should delegate an executor, who will be the person appointed to settle your debts and administer the assets of your probate estate. If you do not have a will (meaning that you die “intestate”), your probate assets will pass pursuant to state law. The court will then appoint an administrator to administer your assets, and that administrator will be required to obtain a bond in order to serve in such capacity.
Additionally, a will can designate a guardian for minor children in the event of the death of the children’s parents. In the event of no guardianship designation, the court may appoint a guardian for minor children who would not be the first choice of the deceased parents.
- 2: What is the difference between a Health Care Power of Attorney and a Living Will?
A Health Care Power of Attorney is a document whereby one person selects another person to make health care decisions for them in the event that they are incapacitated or otherwise unable to make health care decisions for themselves.
A Living Will is a document that only applies in very limited end-of-life circumstances. The Living Will allows a person to set forth directions concerning the use of artificial life-sustaining treatment if and when the person subsequently becomes terminally ill or permanently unconscious. The Living Will is only effective when the person is no longer able to communicate their own end of life wishes.
If a person chooses to only execute a Health Care Power of Attorney, then their agent is given the power to make all health care decisions, including end of life decisions.
- 3: Do I need a trust?
Maybe. A trust is a document known as an Agreement of Trust. Assets can be transferred into the name of the trust, and such property is then administered pursuant to the terms of the Trust. A trustee or multiple trustees are named to administer the trust pursuant to its provisions. Oftentimes the grantors name themselves as initial trustees, where they serve in such capacity until their subsequent incapacitation, resignation, or death, at which point the successor trustee takes over the administration of the assets.
A properly drafted trust can offer many benefits, including but not limited to the following:
- Avoidance of probate court for the assets contained in the trust, which also prevents such assets from becoming public record.
- Planning for the care and maintenance of minor children or disabled individuals.
- Planning for the incapacity of grantor(s).
- Asset preservation and creditor protection.
- Control over the disposition of assets, including the ability to specify when a beneficiary is eligible to receive assets held in trust.
- Minimize estate taxes in high-asset estates.
If you are interested in learning more about these estate-planning documents and their importance, or updating current documents, please contact us schedule a consultation.