Brief Description of Estate Planning Documents
1. Last Will and Testament - a Last Will and Testament describes how you want your probate assets to be distributed after you have passed away. Probate assets are assets that need their title to be transferred upon your death, such as a house, car, or financial account that does not have a designated beneficiary. Non-probate assets are assets that already have a designated beneficiary. Common examples of non-probate assets are retirement accounts or life insurance policies. In properly drafted Last Will and Testament, you appoint an independent executor who is the person that handles the affairs of your estate, such as paying taxes or other expenses and distributing the probate assets owned by you at the time of your death. You can give your probate assets outright to a beneficiary (such as your spouse, children, or charity) or it can be held in a trust for the benefit of a beneficiary (such as your spouse, children, or pets).
There are several different types of Wills that we can draft depending on your needs.
- Simple Will - A Will that gives everything to your spouse or specific beneficiaries.
- Will with a trust for your children: This type of Will distribute assets to a trust, which holds the assets for the benefit of your child. The assets can be used for the child's health, education, maintenance, and support. It also protects the assets from creditors and in the event of a divorce. The trust can either last for the lifetime of your child or may terminate at an age of your choosing.
- Will with a trust for your spouse: This type of Will distributes assets to a trust for the benefit of your spouse, while your spouse is alive, and upon your spouse's death, leave the remaining assets in the trust to your children or other beneficiary. This type of Will is popular in the event of second or more marriages.
- Will with a Credit Shelter Trust: This type of Will takes advantage of your estate tax exemption in order to reduce or eliminate your estate tax, which may be very significant.
2. Trust - a Trust is its own legal entity. A person called a "Grantor” transfers his or her property into a trust for the benefit of someone else called a "beneficiary." The property in the trust is managed and controlled by a person or company called a "Trustee." Trusts are extremely versatile and can be used for many different purposes such as:
- providing income or education to a beneficiary
- leaving a legacy to a charitable organization
- providing a lifetime of financial support for someone with a disability
- There are several different types of trusts which are described here.
3. A "Statutory Durable Power of Attorney" (commonly referred to as a financial power of attorney) allows you to designate an agent to manage your financial affairs and to execute contracts for you in the event you are unable to do so yourself. You can restrict the powers of your agent to specific items (such as signing a real estate closing contract while you are unavailable) or time periods (such as when you are out of the country). The statutory durable power of attorney may be revoked at any time (unless you become legally incapacitated) and terminates upon your death. The statutory durable power of attorney is extremely useful because it allows someone to manage your financial affairs when you are unable to do it yourself. You can make the statutory durable power of attorney effective the day you sign it or you can make it become effective only upon your incapacity which has to be certified by a doctor in writing.
4. A "Medical Power of Attorney" allows you to designate a person to make medical decisions on your behalf if you are unable to communicate your wishes. The medical power of attorney only takes effect if you are not able to communicate with your doctor.
5. A "Health Care Directive to Physician" also known as a "Living Will” notifies your health care provider in advance whether you want artificial life support to keep you alive if you are ever diagnosed with a terminal or irreversible condition. This document is different than am Out of the Hospital Do Not Resuscitate document (commonly known as a DNR). The DNR allows you to declare that certain resuscitative measures will not be used on you.
6. A "HIPAA Authorization" is a document that is now required by hospitals and doctors due to recent privacy laws. It allows your loved ones to communicate with your doctor, nurse, or hospital regarding your medical condition so that they will know what is going on with your health. It does not allow them to make medical decisions for you. It only allows them to obtain information regarding your health.
To discuss any of the above documents or any additional estate planning documents, please contact Maverick Law to schedule an initial consultation.