Estate Planning
Estate planning is creating documents to manage your property after you die or if you become incapacitated and cannot make decisions for yourself. Most people do it with a lawyer’s help. An estate planning lawyer can give you legal advice on the best strategy for your situation.
Estate planning has two main areas of focus. The first is what happens if you become incapacitated. The primary documents in this area are powers of attorney. The second area is what happens to your property after you die. The primary documents in this area are wills, living trusts, and advance directives. Sometimes, estate planning deals with your property while you’re still alive. This is often done to reduce your estate tax burden for your loved ones. Irrevocable trusts are commonly used for this purpose.
Last Will and Testament
The cornerstone of many estate plans is the last will and testament (will). It lays out what you want to happen to your property after you die. You can leave it to family members, charities, or anyone.
You can appoint an executor to manage your property after your death. An executor is also called a personal representative (PR). The PR complies with state laws regarding probate and distributing property. They pay your debts and expenses. They also distribute your property to your beneficiaries according to your instructions in your will. You can also appoint a guardian for your minor children in a will.
If you want to change your will, an estate planning attorney can draft an amendment for you.
Trusts
A trust is a popular estate planning tool. It’s a legal entity that holds your property for the benefit of a third party. That third party is often a loved one, like your children or spouse. In your trust, you appoint a trustee to manage the property you put in the trust.
The revocable living trust (RLT) is the most common trust. People often create an RLT instead of a will because of certain advantages. Those advantages include probate avoidance and privacy. The probate process is when a probate court manages the administration of your estate after you die. It can be expensive and time-consuming. Wills must be probated, while RLTs do not.
Like a will, you put instructions in your trust for what you want to happen to your property after you die. Instead of a PR, you name a trustee to pay your debts and expenses. The trustee also distributes your property to your beneficiaries. You’re called a grantor when you make a trust.
Another popular type of trust is a special needs trust. This is a trust you create to care for someone with special needs.
Power of Attorney
A power of attorney (POA) allows someone you name to act on your behalf. You’re called the principal. The person you name to act for you is the agent. These legal documents generally let your agent handle your financial or health care affairs if you can’t.
A durable power of attorney names an agent for your financial affairs. This document is also called a financial power of attorney. These powers can be broad or limited. A broad POA lets your agent make financial decisions for you regarding:
- Real estate
- Bank accounts like checking and savings accounts
- Life insurance policies
- Beneficiary designations
- Retirement accounts
- Brokerage accounts
- Annuities
A limited POA may only grant authority in one of these areas or for a specific transaction. One example is to sell real estate on your behalf.
A health care POA addresses your medical care. It lets your agent make health care decisions for you if you can’t, including your long-term care. It also typically gives your health care agent access to your medical records.
Advanced Health Care Directive (Living Will)
You can specify your wishes for end-of-life care in an advanced health care directive. This document is sometimes called a living will. Be aware that an advanced directive is not actually a will.
A living will specifies whether you want life-sustaining procedures and artificial nutrition and hydration at the end of your life. In most states, this document addresses terminal conditions and persistent vegetative states.
Get Help From a Trusted Source
Having an estate plan gives you peace of mind. It ensures that your loved ones are cared for if something happens to you. You can use this article as a basic estate planning checklist. But, talking to an estate planning lawyer can be beneficial. They can give you the best advice for your specific situation. Estate planning is one area of law where online forms may suitably address all your needs, but a lawyer can help you think through this as well.
Additional Estate Planning Articles
- Power of Attorney
- Protect Your Children With Your Last Will and Testament
- Naming a Guardian for Your Children
- The Uniform Transfers to Minors Act: An Overview
- Naming Children as Life Insurance Beneficiaries
- What is a variable annuity, and how does it work for estate planning purposes?
- The Advantages of Annuities
- How Do Retirement Investments Fit Into My Estate Plan?
- What are the potential pitfalls of annuities?
- When Is the Right Time to Start Your Estate Plan?
- The 120 Hour Inheritance Survival Requirement
- Understanding Intestate Succession: What Happens When There Isn’t a Will?
- What Legal Issues Are Involved in Winning the Lottery?
- Does a Spouse Automatically Inherit Everything?
- Codicils
- Top 5 Estate Planning Tips for Parents of a Special Need Child
State Estate Planning Articles
- Arizona
- California
- Connecticut
- District of Columbia
- Florida
- Idaho
- Illinois
- Indiana
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- New Jersey
- New York
- North Carolina
- Ohio
- Pennsylvania
- Tennessee
- Texas
- Virginia
- Washington
- Wisconsin