Are you thinking about creating an estate plan to answer your What If question? If you have children or grandchildren think about what would happen to them if they received their inheritance the moment you passed away. What would you have done with that amount of money at a young age? Consider your options.Read More
PLEASE CHECK IF LAW IS CURRENT: The law can change quickly, so please do your research and contact an attorney to ensure that you have the current law. The law as printed here may have changed since posting and the links may have changed.
If your big “What If” question that keeps you up at night centers around your children and what could happen to them if you were to pass away, it is time to answer that question. By properly naming Guardians in case of death, temporary Guardians in case of incapacity, or Power of Attorney in case of travel or incapacity, the answer to your “What If” will be exactly what you want it to be.Read More
You have been told you need to create a Will or Trust. But, you have decided to wait or that you do not need one. If you decide you don’t need to create a Will or Trust, you should at least understand what you are facing in order to make an informed decision. Read on to see what you are getting yourself into.Read More
If I could rename all estate planning documents, I would. It creates confusion for the consumer. Today I will show you that a living will is not a will, but that having both is a vital part of the protection a complete estate plan offers you.Read More
Some pundits assert that the State will take your possessions after you pass away. Although possible, that is not usually the case. However, intestate (without a will) succession should not be taken lightly.Read More
In Estate Plan?! I Ain't Rich! we covered the idea that estate planning is for everyone, not just the very wealthy. Once you come to grips with the idea that you need to take control of your own plan, you are faced with another road block.
Estate Planning Terms! What are these words? Is this a new language? It looks like English, but doesn’t read like English. What does it mean? (And these were just the first thoughts I had when I opened my first Wills, Estates, and Trusts textbook.)
With anything in life, to play the game effectively, you must understand the terms. I’ve found that a basic understanding puts people at ease and an attempt at advanced understanding puts people to sleep (except for your friendly family advisor who geeks out on this). So, what you need to know to fake until you make it; probate, last will and testament, trust, power of attorney, and health care directive.
Probate. This is an often misunderstood proceeding. Generally, this a court proceeding where one person is asking the court to determine how someone else’s property should be distributed after the second person passes away. The goal of probate is to get an order from court allow for distribution of the property. This is either done according to a will or the state’s law of intestate succession. That is you die without a will or trust and the state attempts to guess at how you would distribute your property. Often, it guess incorrectly and family rivalries and old bitterness arises.
Last will and testament. This is a document prepared by you which distributes your property according to your wishes, allows you to select someone to represent your estate before the probate court (this person is usually called a Personal Representative), and allows you to nominate the guardians for your minor children. One drawback is that this document is not controlling until you pass away. But it is an invaluable document to have. Instead of the court guessing what it should do, a will allows you to tell the court exactly what you would like to happen with your children and property. Don’t like people making decisions for you? Me neither.
Power of Attorney. A document where one person gives power to act (called an Attorney in fact) on behalf of another, when that person cannot act for themselves. Generally, this requires a doctor’s determination of incapacity. The use of this document hopes to avoid Guardianship court proceeding. A power of attorney can be active as soon as it is signed, or it can spring into action with a physician’s determination of incapacity. There are legitimate reasons for either option.
Trust. - A document which contains all of your assets and provisions for distribution of your assets. Trusts are controlling and active as soon as you sign it, unlike the will which only takes effect after you pass away. A trust allows you to manage property while you are alive and also allows for distributions while you are alive as well when you pass away. Trusts allow for some pretty cool and specific distributions which can be used to help impart your values and beliefs unto your beneficiaries.
An additional benefit of a trust is probate avoidance. If all of your property “held” in trust, there is no need for probate. This provides access to assets immediately after someone passes away. Probate often requires a waiting period to allow the probate court to issue an order appointing someone as personal representative before assets are available for use (this is a law that many people unintentionally break).
Health Care Directive. Also called a Living Will or Advanced Directive. I like to refer to it as a health care directive because the terms living will and will are easily misused but have very different responsibilities. This document nominates someone to act on your behalf for healthcare purposes and allows you to make your own end of life decisions (ie life support, nutrition and hydration). With a health care directive you get to decide how your care is handled. The person appointed by you is guided by what you put in the health care directive. Your “agent” works with the doctors and helps to interpret your wishes.
Wow! Even the basics can get heavy. But there you have it, a basic understanding of the pillars of estate planning and the court process associated with it.