What Key Estate Planning Tools Should I Know
About?
By taking steps in advance, you have
a greater
say in how these questions are answered. And isn’t that how
it
should be? Wills and trusts are two of the most popular estate
planning tools. Both allow you to spell out how you would like your
property to be distributed, but they also go far beyond that.
Just about everyone needs a will. Besides enabling
you to determine the distribution of your property, a will gives you
the opportunity to nominate your executor and guardians for your minor
children. If you fail to make such designations through your will, the
decisions will probably be left to the courts. Bear in mind that
property distributed through your will is subject to probate, which can
be a time-consuming and costly process.
Trusts differ from wills in that they are actual
legal
entities. Like a will, trusts spell out how you want your property
distributed. Trusts let you customize the distribution of your estate
with the added advantages of property management and probate
avoidance. Wills and trusts are not mutually exclusive. While
not
everyone with a will needs a trust, all those with trusts should have a
will as well. Incapacity poses almost as much of a threat to
your
financial well-being as death does. Fortunately, there are tools that
can help you cope with this threat.
A durable power of attorney is a legal agreement
that
avoids the need for a conservatorship and enables you to designate who
will make your legal and financial decisions if you become
incapacitated. Unlike the standard power of attorney, durable powers
remain valid if you become incapacitated. Similar to the
durable
power of attorney, a health care proxy is a document in which you
designate someone to make your health care decisions for you if you are
incapacitated. The person you designate can generally make decisions
regarding medical facilities, medical treatments, surgery, and a
variety of other health care issues. Much like the durable power of
attorney, the health care proxy involves some important decisions. Take
the utmost care when choosing who will make them.
A related document, the living will, also known as
a directive to physicians or a health care directive, spells out the
kinds of life-sustaining treatment you will permit in the event of your
incapacity. The directive creates an agreement between you and the
attending physician. The decision for or against life support is one
that only you can make. That makes the living will a valuable estate
planning tool. And you may use a living will in conjunction with a
durable health care power of attorney. Bear in mind that laws governing
the recognition and treatment of living wills may vary from state to
state.
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