The process of estate planning can seem overwhelming to a layperson, and admittedly, there are some intricacies that enter the picture. This being stated, there are essentially four boxes to check when you plan your estate, and we will look at them here.
Asset Transfer Vehicle
When you plan your estate, you have to facilitate postmortem transfers to your heirs. A simple will is an option, but it will not be the right choice unless the situation is stripped-down and very straightforward.
Most people find that a living trust is actually a better choice. The estate administration process is streamlined when you go this route because the assets are consolidated under the umbrella of the trust, and the probate court is not involved.
On the other hand, a will would be admitted to probate. This is a time-consuming legal process that takes place under the supervision of a court, and it is a public proceeding, so there is a loss of privacy.
If you have a living trust, you would act as the trustee while you are living, and you would name a successor to assume the role after your death. In the trust declaration, you can instruct the trustee to distribute a certain amount each month, or you can stipulate some other distribution schedule.
When limited distributions are spread out over time, the beneficiaries will not be able to burn through their inheritances too quickly. Plus, the principal would be protected from their creditors.
This is one of a number of different trusts that can be used to serve certain targeted purposes. If you work with an attorney from our firm to put a plan in place, we can explain your options so you can make fully informed decisions.
Life Support Preferences
Your estate plan should address the medical situations that can present themselves toward the end of your life. In some cases, physicians can keep people alive through the utilization of artificial life-sustaining measures when there is no hope of recovery.
You can state your preferences with regard to the use of these measures in a living will. In addition to the life-support question, you can include comfort care medication and organ and tissue donation choices.
Durable Powers of Attorney
Most people are aware of the fact that a power of attorney is used to give someone else the authority to act on your behalf. There are general powers of attorney that would give the agent sweeping powers, and there are limited powers attorney that are more targeted.
A durable power of attorney will remain in effect after the incapacitation of the grantor, so these documents are used for incapacity planning purposes. With a durable power of attorney for property, you can empower someone to manage your financial affairs. It should be noted that you can name a disability trustee to assume the role while you are still living in the event of your incapacity.
Advanced Health Care Directive
Your estate plan should include an Advanced Health Care Directive. This would give an agent of your choosing the legal right to make medical decisions on your behalf that involves situations that are not covered in the living will.
The Health Insurance Portability and Accountability Act (HIPAA) is in place to keep patient information confidential. Because of its existence, doctors would not be able to release your medical information to your health care agent unless you include a HIPAA release.
It should be noted that this privacy protection extends to all adults, even young people that are 18 years of age. As soon as your child reaches this age, you should encourage them to execute a HIPAA release to give you the ability to speak freely with their doctors.
Attend a Free Webinar!
We conduct webinars on an ongoing basis to provide learning opportunities for people that want to protect their legacies. There is no charge to attend these webinars, and it couldn’t be any more convenient, so we urge you to join us.
You can see the dates if you head over to our webinar page, and when you identify the one that works for you, follow the instructions to register so we can reserve your spot.
- Estate Planning Made Simple - March 16, 2022
- Plan Now for the Incredible Shrinking Exclusion - June 20, 2021
- An Explanation of the Life Estate - June 19, 2021