Many people think you must be rich if you need a will or trust. This is truly not the case. Wills and trusts are efficient vehicles to avoid a costly and lengthy drawn out probate process which can take 6 months to 2 years. It also helps avoid conflict with surviving family members and protects them from undue burden after you pass. An effective estate plan is one that truly accomplishes your objectives and that balances competing objectives according to your priorities.
An estate plan commonly consists of four key documents: (1) a revocable living trust; (2) a “pour-over” will; (3) a durable power of attorney for property management; and (4) an advance health care directive. A revocable living trust has several key advantages, including keeping your estate out of probate and reducing or eliminating taxes. The trust, durable power of attorney and advance health care directive also provide the additional benefit of designating trusted individuals to manage your financial affairs and make medical decisions for you should you become incapacitated.
Estate planning will often involve one or more of the following:
Powers of attorney
Healthcare powers of attorney
Guardianship of minors
Distribution of assets
A will is one of the most standard and well known of all estate planning tools, and as part of a full estate plan a will can help ensure that your wishes are met and your assets protected upon your death.
As part of a complete estate plan, a will provides direction for the distribution of assets and property upon your death. If there is real property in an estate, however, a will cannot stand alone to protect your assets. A living trust is necessary, and a will serves as a supplement. However, if there is no real property in an estate, a will may provide the necessary protection and direction for your estate upon your death. In any case, a will is an essential component of an estate plan.
Furthermore, a “living will” refers to what many commonly think of as “Right-to-Die Clause”. If a person’s life is being sustained solely by artificial means, the will states whether or not that person desires to continue with artificial life support. This allows family members to continue with such person’s wishes without court involvement.
A Living Trust is a legal document or “vehicle” that allows a person’s assets to pass onto family members or designated beneficiaries without the involving probate proceedings. “Trustors” place assets into a trust that they can control while they are alive. While such person is living, he or she also acts as “Trustee” and continues to have the same power to buy, sell and do whatever he or she wishes with the assets of the trust. However, upon death, the assets transfer to the beneficiaries as directed by the then deceased Trustor, administered by his or her designated Trustee to take control and help administer the deceased person’s wishes.
A living trust is the most efficient way to protect your estate and family from the probate process. Trusts are also an excellent vehicle to maintain control of your estate and your assets, even if you become incapacitated or disabled. With a living trust, you can also designate people you’d like to care for you if needed, and for your minor children. You can nominate a guardian for your children, and a conservator for yourself, avoiding much of the burdensome process of court appointment.
A trust provides not only protection from the dreadful probate process, but also from its public nature. A trust is private, both while you are living and after your death.
Durable Powers of Attorney for Health Care and Asset Management
When it comes to those who may be disabled, either physically or mentally, these documents legally identify who has been chosen and entrusted to make medical and financial decisions if a person becomes incapacitated and is unable to make those decisions for themselves.
The people chosen in these documents (often a spouse or child) may manage the affairs of an incapacitated person without the involvement of the courts.