We’ve all heard of estate planning. You may have even toyed with the idea of writing your own Will using an online website. But do you know exactly which documents you need in order to have a complete estate plan? Some documents come in several forms with significant differences. When it comes to estate plans, will you know which documents you need?
Most estate plans consist of a Will or a Revocable Living Trust (with a pour-over Will), a durable power of attorney, and an advanced medical directive. Most estate plans for people who have attained some wealth also include at least one trust, often a revocable living trust.
Last Will and Testament.
Your Will allows you to give instructions on some important things that need to be done after your death. You will name a personal representative (also known as an executor) and make gifts called bequests. If you have minor children, this is the time to name a guardian. It’s also possible to set up a testamentary trust through your Will.
Durable Power of Attorney for Financial Affairs.
With this document, you can name another person (your agent) to handle your financial affairs. A power of attorney can be limited or broad. It’s important, however, that the power of attorney be durable which means the power granted to your attorney-in-fact continues if you become incapacitated.
Health Care Directive.
This estate planning document is similar to a durable power of attorney in that you are naming someone to act on your behalf if necessary. A health care directive, however, only applies to medical issues. In addition to naming an agent, a health care directive allows you to state your preferences regarding medical treatment. Without a health care directive, your family may have to go to court to gain the authority to make decisions for you.
One or More Trusts
A revocable living trust is a common, powerful estate planning tool. Not every person who prepares an estate plan needs one but if your wealth is greater than $200,000, you should consider a revocable living trust. Passing your estate to heirs through a trust offers benefits like fast transfer to heirs after your death, avoiding probate, reducing costs, providing for lifetime incapacity and other issues, depending on the terms of the trust. Trusts also do become part of public recording during a probate proceeding.
There are many types of trusts, each with a different purpose. Some trusts offer asset protection, while others provide ways to transfer wealth from generation to generation with little to no tax consequences. Special or Supplemental needs trusts often allow people to plan for the future needs of a disabled loved one. While commonly used, trusts are complicated and should only be established with the advice and assistance of a qualified attorney.
It’s Only One Part of Your Complete Estate Plan.
The attorneys at Virtus Law take the time to listen to their clients and offer thoughtful advice. Make an appointment to speak with an attorney about your estate planning today. Please contact us by calling 612.888.1000 or emailing us at info@virtuslaw.com. Our main office is in Minneapolis, with other offices located in Maplewood, Cambridge, Edina, Mendota Heights, and Red Wing.