There
are certain documents that you should consider essential in the
preparation or review of your estate plan. They are. . .
A Revocable Living Trust.
First, you
should consider building your estate plan on the foundation of a
Revocable Trust. These are
sometimes called Living Trusts or Family Trusts. This is an important part of the estate plan
of an increasing number of individuals and families. In many cases, a Trust is no more complex a
document than a properly prepared Will. You would create this Trust during your
lifetime and you would be entitled to change the terms of the Trust
or, even, revoke it at any time.
You would be known as the creator or Grantor of the Trust. Assets in trust do not pass to your
heirs under the terms of your Will; rather, they are transferred
according to the instructions in the Trust document. The Revocable Living Trust is becoming more
popular because it allows you to pass your inheritances to your
named beneficiaries outside of the formal, court-supervised probate
process. This means your Trustee
would be able to distribute your assets as you desire in a more
efficient manner and, it is typically completed more quickly and at
a lower cost to your estate.
A Will.
Even with a
Revocable Living Trust, you would want to include a Will with your
estate plan documents. In case
there may be an asset that was not transferred to the Trust, the
Will would provide the road map telling your personal
representative how to distribute your assets to other people or to
a charity. Likely, the terms of the
Trust and the Will are the same.
Typically, the same person or persons would be your Trustee(s) and
your Executor(s). Without a Will,
you are powerless over how your assets are distributed. Instead,
the laws of the state in which you reside at the time of your
death, the state in which you your home is located and where you
spend most of your time, determine how assets are divided. State laws rarely direct your assets the
way you would direct them. Having a
Trust and a Will, or at least a Will, ensures that your wishes will
be honored at the time of your death.
A Durable General Power of
Attorney.
A Durable
General Power of Attorney permits the holder of the power to act on
behalf of another individual (known as the grantor) and survives
the incompetence of the grantor so that even if the grantor is no
longer capable of acting for herself or himself,
the trusted
agent may exercise a power to act. The alternative to having a
Durable General Power of Attorney is not desirable. In the absence of such a document, it would be
necessary for a court-appointed guardian to be named.
In many
cases, there may not be consensus within a family regarding who
should be named to this role. In
nearly all cases, this is an expensive, emotional, complicated and
avoidable -- solution to the problem, a step rendered unnecessary
if a Durable General Power of Attorney exists. For many people, a Durable General Power of
Attorney may be the most important document in their estate
plan.
A Health Care Power of
Attorney.
In some
states, it is necessary to prepare a separate document to authorize
an agent to act for you regarding medical and health care
decisions. These are sometimes
called Health Care Powers of Attorney. In other states, it is possible to include the
terms regarding health care decision making in the overall Durable
General Power of Attorney. The key
thing is that someone should be named to act for you concerning
these matters so that you and your family retain control over these
decisions at times when you want those you most trust to be
thinking about your best interests.
A Medical Directive.
In some
states, this document also may be known as a Living Will, a term
that is not entirely helpful in appreciating the role and
significance of the document. A
Medical Directive is a key part of your estate plan. In preparing a Medical Directive, you can
articulate your beliefs on life-sustaining measures in the face of
terminal illness or other life-threatening conditions. In this document, you can let your family,
your doctors, and others responsible for your care know when
life-support equipment should be disconnected and medical efforts
should cease. Without a Medical
Directive, you would leave your family members to struggle with
these decisions and, you would give the medical professionals no
indication of your desires at a critical moment in your
care.
Please Note. . .
While these
are not things any of us are comfortable discussing illness,
incompetence, life-and-death decisions, mortality these are things
that we should act on responsibly during our lifetimes for the
benefit of those we most care about our families, our friends, and
the charitable organizations we support during our
lifetimes.
If you haven't completed your estate plan, or if it has been years since you last reviewed it, we encourage a visit with your attorney to discuss these
matters.
The information provided here is not intended as
legal, tax, or investment counsel.
For such advice, please consult with an attorney, tax
professional, or investment professional.
© 2003 James Madison University. All Rights Reserved.
