Most people believe that having a proper estate plan in place is important to ensure that they and their families are taken care of. According to Caring.com’s 2019 survey, 76 percent of respondents believe that having a will is important, but only 40 percent of the respondents actually have one. While it’s great that 76% believe that a will is important, it is essential to realize that a will is just a tool that needs to be used in conjunction with other tools and is part of a larger holistic estate plan that needs to be continually updated. Today, we want to briefly go over the four main tools that will be used in your holistic estate plan.
Bear in mind, estate planning is not a one-size-fits-all endeavor; it is a customized plan designed to best protect you and your loved ones. Your estate plans will likely include the following components:
Will: A will (sometimes referred to as a last will and testament) is a written document used to appoint a loved one aka: personal representative or executor, to enact your wishes, handle your affairs upon your death, explain how your property and money are to be distributed, and appoint a guardian to care for minor or dependent children.
Pour-Over Will: A special type of will (which we use at Family Estate Planning Law Group), where your trust is named as the beneficiary. This document is used in case your assets are not fully aligned with your trust prior to death. It acts like a catch-all in case something changes and you pass away before you and our team can realign your estate plan. The pour-over will is admitted to the probate court, and everything is transferred to the trust through the probate proceedings.
Revocable Living Trust: While there are many different types of trusts, a revocable living trust is often the foundation of an estate plan. A revocable living trust is a written agreement in which a trustee is appointed as the owner of the title to property and is tasked with managing the property for the benefit of one or more beneficiaries. You will serve as the initial trustee and primary beneficiary. If you become incapacitated, then the trust will be managed by a loved one who you’ve named as a successor trustee. They will manage per your instructors and/or to your benefit with little interruption and no court involvement. Upon death, the successor trustee manages and distributes the assets according to the instructions you put in the trust.
Financial Power of Attorney: This is an instrument that you will use to name an individual to act on your behalf in financial affairs (e.g., signing a deed, opening a bank account, signing checks, filing taxes, etc.) in the event of your incapacitation. There are several different types of financial powers of attorney depending upon your needs and the types of transactions that might be required.
Health Care Proxy: This document allows you to nominate an individual to make medical decisions on your behalf if you become incapacitated or otherwise unable to communicate. This power only goes into effect upon your inability to communicate.
To learn more about how these tools will be specifically used to help your protect your assets and your family, visit our website, explore our blog, and schedule your complimentary consultation today!