One of the reasons why it is very important to establish a relationship with an estate planning attorney is because personalized attention is key. Some people assume that there are one-size-fits-all solutions, but in fact, this is not the case. Multiple approaches can be taken, and the ideal course of action will depend upon the circumstances.
This being stated, there is a simple framework that can be applied in general in spite of the fact that there will be significant variations. In this post, we will look at the standard components of a well-rounded estate plan that covers all of your bases.
Clearly, arranging for the distribution of your asset to your heirs after you are gone is the matter that is at the core of the estate planning process. A last will as an option, but there are a number of different trusts in the estate planning toolkit. The one that is useful for the widest range of people is the revocable living trust.
If you were to establish a revocable living trust, you would be called the grantor. The anatomy of the trust will include a trustee that handles the trust administration tasks, and your heir would be the beneficiary. It should be noted that you can include multiple beneficiaries if this is your choice.
You do not have to be concerned about surrendering control of the trust to the trustee. While you are alive, you can act as the trustee, and you can also be the first beneficiary of the living trust. It is possible to amend the terms of the trust, and you can add or subtract property at any time.
The ultimate goal is to use the trust to direct the asset transfers that will take place after your passing, so you name a successor trustee to administer the trust at that time. It can be someone that you know personally, and depending on the circumstances, this can be the right choice.
Another option would be to engage the services of a corporate trustee. This can be the solution if you don’t know anyone that would be right for the position. Aside for this, a professional fiduciary can provide a level of expertise that a layperson simply is not going to possess. There would also be no longevity concerns or conflicts of interest.
After you are gone, the trustee would follow instructions that you include in the declaration and distribute the assets in accordance with your wishes. This can be done outside of probate, which is a costly and time-consuming legal process that would be a factor if you use a last will.
This is one living trust benefit, but there are many others. In addition to this type of trust, there are other trusts that can be used to satisfy the needs of people with complicated estate situations.
Empowerment of Financial Representatives
A significant percentage of elders eventually become unable to handle their own affairs due to incapacitation. When you have your property in a living trust, you can empower a disability trustee to take over if you ever become incapacitated.
Most people are aware of the fact that a power of attorney is a document that you can use to give someone else the ability to act for you in a legally binding manner. A durable power of attorney can be used to name an agent to make financial decisions on behalf of the grantor of the trust.
The fact that it is “durable” matters a lot, because a standard power of attorney that is not durable would no longer be in effect upon the incapacitation of the grantor.
This would be important for people that don’t have a trust with a disability trustee, and it could be useful as an addition to the trust disability provision. The execution of this document would allow the agent to manage assets that were never conveyed into the trust.
Advance Directives for Health Care
The third very rudimentary estate plan component applies to health care choices. A living will is an advance directive for health care. This device is used to state your personal preferences with regard to life-support utilization when there is no hope of recovery.
Since other types of decisions may present themselves, you should add a durable power of attorney for health care. This would allow the agent to serve as your health care decision maker. In order for the agent to have access to your medical records, you would include a HIPAA release form.
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To gain a better understanding of the estate planning process, take some time to go through our carefully prepared worksheet. It is being offered free of charge, and you can visit our worksheet access page to get all the details.