A look at the Documents Used in Estate Planning
Saturday, June 11th, 2011In the creation of a personal estate plan, several different types of documents will need to be employed. An estate plan normally includes four or five main legal documents and in certain cases even more. Having a credible and knowledgeable estate planning attorney to assist and guide you through the creation of these documents is very important, but here is an overview of what they are in the interest of being as informed as possible in going into the process.
The main two documents are a will and a durable power of attorney. A will is the legal document that transfers your property and assets to the person, persons or organizations you wish to have your possessions. A will typically also names an executor of your estate, who will carry out your instructions upon passing. The will is also where you would name a guardian of any minor children and establish any funeral arrangements you wish to be carried out. A will goes into effect only once your death has occurred.
There are two types of powers of attorney. The first is a durable power of attorney for health care, also known as an advance health care directive. This appoints a person of your choosing to make decisions regarding your health care treatment if you were to become incapacitated to do so. It also provides the hospital and care givers with instructions regarding the length and type of care you desire should you become permanently incapacitated. This document is specific in regards to life support services. The other durable power of attorney is for property or assets. This document appoints a person who is responsible to handle any financial matters should you become unable to continue to do so. Depending on the situation these documents can be employed together or separately. It is common for a person to have health problems but still be mentally apt and vice versa. Thus it is advisable to cover all of your bases.
A living trust is also an important document to consider. A trust is created to hold legal title and provide a way to manage your property. You select who is the trustee or trustees, most often yourself and often have a successor in the event of your passing. The main difference from a will is that a trust goes into effect immediately, not after your death. A trust will establish who will get what of your estate once you pass. Having a revocable trust will allow you at any time for any reason to make changes. Some of the reasons to create a trust are to limit estate taxes and avoid public probate once you pass.
If you have a trust instead of a normal will you will normally have what is called a pour over will, which will facilitate transferring your remaining assets into the trust upon your death. This would also be the place to name legal guardianship of any minor children.
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