An estate plan is a series of legal documents that ensure that your assets are distributed to the people or entities you choose, how much they receive, when you choose, the way you choose, with the least possible loss in value.
Documents often found in an estate plan include a Revocable Trust, Pour-Over Will (which is a special type of will that allows assets that the settlor forgot to designate into his trust to “pour over” into a trust after his death), Durable Power of Attorney, and a Health Care Power of Attorney.
An estate plan with a trust might also often contain any documents that provide for the settlor’s wishes with respect to how he would like to be buried or cremated at death.
A Transfer on Death Deed is a separate document from a trust that provides an estate plan for a real estate. A regular will is also different from a trust and can be prepared separately or in tandem with a trust.
Revocable Trust
A trust is a legal document that explains how you want your assets to be distributed after you die. Your assets may include real estate, bank accounts, investments, life insurance policies, businesses and business assets, and personal property such as cars, jewelry and antiques.
When your estate planning attorney drafts your trust, she includes a set of rules that explain what will happen with your assets. In this way, the courts do not have the power to dictate what happens with your property because you have done that in your trust.
Trusts have several advantages: They give you control over how your assets are distributed. They allow you to decide who gets your property, how much of it and when. They completely avoid probate, so you save a great deal of time, attorney’s fees, court fees, and publicity.
Transfer on Death Deed
A Transfer on Death Deed allows you to leave real estate to a beneficiary by signing and recording the deed now; however, the deed doesn’t take effect until your death.
This means the beneficiary you name on the deed has no rights until you die. At the same time, the law allows you to revoke the deed or sell the property at any time, as long as the original owner is alive.
Last Will and Testament
A will is like a letter to the judge explaining how your want your money and property distributed and to whom. This court-supervised process of proving that your will is valid and following its terms is called probate.
Wills become public record during probate, so all thoughts of privacy are lost because anyone can see the wills’ contents.
Durable Power of Attorney; Health Care Power of Attorney
A power of attorney is an agreement between two people, a “principal” (you) granting the power to another person, the “agent” or “attorney-in-fact”, to make decisions for you if you are not able to make these decisions for yourself.
A Durable Power of Attorney gives your agent the authority to make financial decisions on your behalf if you become incapacitated. These decisions include the power to pay bills, make investments, buy or sell property, conduct banking transactions and file tax returns.
A Health Care Power of Attorney gives your agent the authority to make health care decisions on your behalf if you become incapacitated. These decisions include the power to consent to medical treatment, choose physicians and other medical professionals for treatment, and make decisions about which medical facilities to use.
The person you choose to be your agent for the Durable or Health Care Power of Attorney takes on a heavy responsibility. The person can be a spouse, other relatives, and close friends. For an agent, some people choose their legal or financial advisor. The person you choose should be assertive enough to make decisions consistent with your wishes.
