There are many different concepts, strategies and approaches to estate planning. The most prevalent assumption about estate planning is that it is only for the rich who have lavish gifts and money to distribute. If you have children or loved ones to take care of, if you have ever purchased life insurance, or if you have ever gone into the hospital for an inpatient procedure, then estate planning becomes a pertinent issue. Below is a brief primer on estate planning tools and how they work:
Last Will and Testaments
Wills allow you to distribute your assets in a manner which you prescribe. Clients should understand that having a will alone does not avoid probate. A Will is the most basic component of estate planning that everyone should have, regardless of the size of one’s “estate.”
Though there are many types of trusts, most clients have heard of the “Living” or “Revocable” trust. These trusts can provide for the “trustmaker” during their lives and preserve their legacies by controlling distributions to his or her beneficiaries. It can be a powerful estate planning tool, but it is not for everyone.
The most prevalent assumption about estate planning is that it is only for the rich who have lavish gifts and money to distribute.
Living WillsTypically confused with a Will, but they have nothing to do with distributing assets. Living Wills are used to notify health care advocates (doctors, nurses, hospital administrators) whether or not you want “life-prolonging” machines and measures utilized in the event that your body cannot sustain itself. The notorious case of Terri Schiavo shed light on the importance of having a Living Will and Health Care Surrogate Designations (Health Care Power of Attorneys, described further below)
Health Care Surrogate DesignationsMore commonly known as Health Care Power of Attorneys, these instruments when properly planned and drafted, assure that in the event that you cannot make important medical decisions for yourself, a trusted family member or friend may step in and help. They are often integrated with Living Will instructions but may stand alone.
Power of Attorneys
(types: durable, general, special)
A powerful instrument which allows a trusted family member or friend to stand in your shoes and perform activities that would normally require your authorization. Durable Power of Attorneys are particularly useful because they do not “expire” upon your mental incapacity. For example, if you found a buyer for your house and subsequently were injured in a car accident rendering you mentally incapacitated, your “attorney-in-fact” (the person you entrusted with your power of attorney) could make sure that the house was sold without delay and the proceeds were utlized for your benefit until you regained stable mental capacity.