Know Your Estate Plan

by Sheryll Bonilla, Esq.

If you’ve watched TV shows or movies, you will notice that most of their story plots include people fighting over a person’s will. But do you really know what a will is? How about planning the future of your assets once you have passed?

WillA will sets out how you want you want your assets divided and distributed after you pass away, and names the person you want to implement those instructions. It also gives you the chance to identify the family member or friend you feel is best to raise your children if you and your spouse die before they grow up.

Even if you’ve taken care of property ownership through other means, if you die in a car crash, for example, a will directs who gets the settlement money from it.

Without a will, the settlement money is divided by the state’s intestacy laws.

Revocable Living Trust
A trust has advantages beyond a will. It protects your privacy by not having to go through probate court. Wills go through probate court, which means you lose your privacy since the will and all the documents in the probate file become public record that anyone can see. It preserves your tax exclusions if you have significant assets; without a trust, your exclusion (in 2015, $5.43 million) dies with you. It avoids the cost, delay, and hassle of probate by authorizing someone you trust (your successor trustee) to manage your estate at your death. It may cost more upfront, but it saves money in the long run.

Funding Your Trust
If you made a revocable living trust, it’svital that your assets be placed in the name of your trust. Your successor trustee cannot manage the property that was not put into the trust and may have to go to court to have the property put into the trust so that it can be administered or distributed according to the directions you gave in your trust. That costs money and takes time. Your trust package comes with a document titled “Short Form Trust” or a similar name. This is the document you use to take to your stockbroker, insurance agent, bank, and other financial advisor or institution to register your asset in the name of the trust, which “puts” it into the trust so that your property is governed by your directions in the trust.

Designating Beneficiaries
Some assets pass automatically at your death to the beneficiary you name, regardless of what you direct in your will or trust. Examples are life insurance, retirement benefits, and some bank accounts. When thinking of the distribution instructions you put in your will or trust, make sure to take these into consideration to make it consistent with your overall estate plan and personal goals.

Example: even if your will evenly divides your assets among three children, if you make one of them a joint tenant on your bank account, name another on your retirement benefits, and designate the third on your life insurance, all of those assets will go to them outside of your will or trust. This may result in an uneven distribution that they are unhappy about, especially since there’s nothing that can be done to reverse the inequality.

Power of Attorney
This legal document gives you protection in case you become disables such that you cannot take care of your financial assets. You appoint a person you trust to act as your agent to make financial decisions and carry out those decisions, so that your financial obligations and management continue intact.

Advance Directive for Healthcare
This used to be known as a “living will.” In it, you appoint a person you trust to make medical decisions for you if you cannot do so and set out your directions for end-of-life decisions if you cannot communicate it. These decisions included whether to give you pain relief even if it hastens your death; to give or withhold tube feeding; what facility to admit you; and others.

This article is for informational purposes only and is not to be constructed as offering legal advice. Please consult an attorney for your individual situation. The author is not responsible for a reader’s reliance on the information contained here.

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