Establishing an estate plan is one of the most important steps you can take to protect yourself and your loves ones in the event of your incapacity or upon your death. Proper estate planning is one of the greatest acts of love toward your family. Careful planning spares your loved ones the expense, delay and frustration associated with the failure to plan. This planning spares your loved ones the expense, delay and frustration associated with managing your affairs when you pass away or become incapacitated.
The following will inform you on the misconceptions of Trusts in general.
On a very basic level, a living trust is an alternate way of owning assets such as cash, stocks, bonds, real estate and personal property. As an estate planning tool, it allows one to maintain privacy and avoid the expense and inconvenience of guardianship and probate. You decide who safeguards and manages the trust should you become incapacitated, thus avoiding guardianship. With your assets in a trust, they automatically go to your beneficiaries when you die.
A will is a legal document that instructs how your property is to be distributed after your death. It may also designate guardians for your minor children. Unfortunately, your will does not save your estate from passing through the process of probate before it can be distributed to your heirs.
The advantages and reasons of a revocable living trust versus having only a will are illustrated below:
|A Will||A Trust|
|Does not provide direction or control the event of lifetime incapacity||Prevents court control of your assets during incapacity|
|Becomes public record when probated||Provides maximum privacy and requires more effort and expense for disgruntled heirs to challenge|
|Is more easily contested by disgruntled heir||Requires more effort and expense for disgruntled heirs to challenge|
|Probate provides an easy place for creditors to make claim gains||Creditors must initiate claim proceedings on their own.|
|Is effective only upon death||Is effective immediately|
While trusts are important when it comes to estate planning, they are sometimes misunderstood. Let’s debunk some common misconceptions: trusts are not only for the wealthy and they’re not used to “hide assets” so as to avoid estate or income taxes . . . they are not expensive to set up . . . and they do not prevent you from using your assets once they’re in the trust.
Power of Attorney for Property. This legal document allows you to give legal authority to a person or organization (sometimes called “the attorney-in-fact” or “agent”) to handle your business affairs and other issues while you’re unavailable or unable to do so. The exact scope of the power given is spelled out in the document. The problem with a Power of Attorney is that no one is required to accept it. Many times, upon incapacity, an agent is stunned to discover that a financial institution arbitrarily decides not to honor it. At that point, guardianship may be the only option.
Health Care Directives. Using a Health Care Power of Attorney – allows you to appoint the persons you have selected to make emergency medical decisions. A Directive to Physician or “Living Will” allows you to choose your end of life decisions – whether to be kept alive at all costs, or to be allowed to die as gently as possible.
Everyone age 18 and older needs to have this fundamental legal document signed, a copy on file with their physician, and a copy given to each of their appointed agents.
HIPAA Authorization. This document should be a prominent part of your health care directive. It is your authorization for named persons to view your medical records and discuss your care with medical providers. Without this document or specific authorization, there is the possibility your doctor may decide not to speak to your designated health care agent.
To learn more about estate planning and the components of a living trust contact the Voeller Law Firm and Jim and David will guide you in the learning process from start to finish. Call The Voeller Law Firm today to setup a free consultation with Jim Voeller, Esq, and David Voeller, Esq.