Most people think about estate planning and they immediately equate it to the creation of a will. This is an estate planning document that you can use, but there is a lot more to it, and we will broaden the scope in this post.
The idea that a will should be at the core of almost all estate plans is patently false. In reality, a revocable living trust is far more effective on a number of different levels, even if you are not a millionaire.
You may be uncomfortable with the idea of giving direct inheritances to your loved ones all at once because you have concerns about their money manager capabilities. You would be providing lump sum inheritances if you use a will, but you have options if you have a living trust.
After your passing, the trust would be irrevocable, and this means that the beneficiary’s creditors would not be able to reach the assets in the trust. When it comes to the distributions, you can set up any payout schedule that you want, and the trust can remain active for years.
Another benefit is the ability to protect your dependent children. You can carry sufficient life insurance and make the living trust the beneficiary. If the unthinkable takes place, the successor trustee that you name in the trust would manage the assets on behalf of the minors.
There is also the matter of estate administration. The inheritors have to wait for eight months or more to receive their inheritances through the terms of a will because it has to go through probate process. Probate is not necessary when a living trust is utilized.
If you have a living trust, you may pass away while you are still in direct personal possession of some assets. To account for this possibility, you should include a pour-over will that would facilitate the transfer of these assets into the trust.
Letter of Final Instruction
The executor and/or trustee that is administering your estate will need information to be able to effectively complete their tasks. We are talking about keys, entry codes, passwords and usernames for financial accounts that are managed online, hardcopy documents, etc.
You can pass along all this information in a letter of final instruction. Put yourself in the administrator’s position, envision what you would need to know to complete the job, and act accordingly.
Advance Directives for Health Care
A well-constructed estate plan will address end-of-life eventualities, and some people overlook this element. You can state your preferences with regard to the use of life-support measures in a living will, and you can add organ and tissue donation choices.
Other types of medical scenarios could develop that require medical decision-making when you are unable to communicate. You can name an agent to make these decisions on your behalf in a durable power of attorney for health care.
Doctors would not be able to discuss your condition with your health care representative unless you sign a HIPAA release, so this is another document that is necessary.
Unfortunately, over 30 percent of the oldest old contract Alzheimer’s disease, and there are other causes of cognitive impairment. With this in mind, you can name someone to manage your financial affairs if it becomes necessary in a durable power of attorney for property.
If you have a living trust, you can empower the successor trustee or anyone else that you name to administer the trust in the event of your incapacity.
Schedule a Consultation Today!
If you are going through life without an estate plan, action is required. We can gain an understanding of your situation and help you develop a personalized plan that ideally suits your needs.
You can schedule a consultation at our Cincinnati estate planning office if you call us at 513-721-1513, and you can use our contact form if you would like to send us a message.