You might have heard some of these terms, Last Will and Testament, Living Will, Power of Attorney, but aren’t exactly sure what they are or if you need them. From an Estate Planning standpoint, these records are crucial to make certain that your resources are distributed properly and your legal interests are protected. <!–More–>
A Last Will and Testament is a record that sets forth the distribution of your assets at the time of your departure. A common misnomer that people have about Wills is that you need to divulge all your bank account and financial information to the lawyer who is drafting the Will. This is simply not correct. Normally, the Testator (the person with the Will) just sets forth the names of the heirs and just how much of his estate every heir will receive, i.e. 50 percent to my son, Joe, and 50 percent to my daughter, Jill. Normally, only particular assets are specifically named in the Will, i.e. my 5 carat diamond ring for my friend, Lucy, or my house in Palm Springs for my friend, Jack.
After that, a simple Will requires just a few different things. You have to name an Executor of your Will. The Executor is the person who will take care of the Estate affairs after your passing. He/She will start an Estate, decide all the your assets and obligations, and make distribution of these assets according to the guidelines put forth in your Will. You’ll also need to name a Trustee if you’re planning on leaving any assets to a minor. There are a couple other minor legal requirements your community lawyer can help you with in drafting your Last Will and Testament.
A Living Will is a document that sets forth your wishes as to specific kinds of medical treatment in the event that you suffer a permanent disability that leaves you incapacitated with no expectation of recovery. The instance that we’re discussing here is the individual in a coma or permanent vegetative state. For a Living Will to take effect in Pennsylvania, two physicians must certify that you don’t have any real hope of recovery. At that stage, your Surrogate (this man is called in the Living Will) will meet with your doctor and notify him as to your wishes regarding treatment. If you would like to learn more about the who, what and when of estate planning documents.
A Power of Attorney is another important file. I usually recommend the General Durable Power of Attorney. This document gives your Agent the ability to act on your behalf in just about any sort of situation you could consider. The Agent has the power to sign checks, transfer property, make medical decisions and a lot more. As you can see, this record is extremely powerful, and therefore, the authority bestowed with it should only be allowed to a person that you trust beyond reproach. This record becomes significant in the event where you can’t act on your own, or have trouble doing this. But, you should be advised that this document takes effect immediately upon registering. The majority of my clients are under the impression that this record only takes effect if they become incapacitated. That simply isn’t correct. Again, at least in Pennsylvania, this document gives your Agent the ability to act in your behalf immediately.
When it is time to think about estate planning, lots of people are able to procrastinate without understanding the consequences of the delay. Nobody is really comfortable considering what happens in the event of injury, disability, or even death, especially if young children are involved. However, among the most effective ways to achieve peace of mind is to have a complete estate plan in place to be certain that your family is cared for when the time comes.
There are five principal documents when it comes to estate planning, which range from a Will into a Power of Attorney. Let’s take a minute to look at these five records that help us ensure our families are cared for. Laws may vary by state, so it is important to get each document drawn up by a local lawyer who is familiar with each state’s rules and regulations.
The Will is exactly what many individuals think in terms of entire estate planning. This document primarily addresses three major questions, but only comes into effect upon the death. It designates who controls the government of a person’s estate after someone passes away. Secondly, it determines who receives the resources. Third, it designates legal guardians and conservators to take care of the financial and medical decisions if there are any living minors. This document is critical in securing the base of your last matters should you not have a Revocable Living Trust.
The Living Will, also called an advanced medical directive, is used to formally state, in advance, whether one wants to deny or terminate the use of artificial life support if the situation arise. This document also allows someone to say in advance whether they should get food and water in the event the Living Will is in effect. By establishing your desires beforehand, it helps eliminate such weight from the family’s shoulders.
A Living Trust, also called a revocable trust or revocable living trust, is an alternative to the normal Will. It’s a highly flexible document that could provide for the management of a person’s assets while living and upon their passing. This process of estate planning enables exceptional control over one’s assets. If drafted properly, it eliminates or limits specific taxes and provides a tremendous level of asset protection for one’s heirs if they get divorced or have other creditor issues.