Sponsored - The beginning of a new year is a good time to take a look at your estate plan to make sure it is up to date. Less than half of people actually have any estate planning documents in place and many of those people may have outdated documents. Documents that were created when your children were born may need updating 10, 20, or 30 years later, after your family and financial situation have changed entirely.
Everyone should have the following essential documents: a financial durable power of attorney, a health care power of attorney, a HIPAA release and authorization, a living will, a will, and a trust. For more information on the different estate planning documents, types of trusts, and planning options, click here.
Your will says who will get your stuff when you die and who will be in charge of paying your bills, filing your tax returns, gathering your stuff and distributing it according to your instructions.
But here’s the irony: although the will gets all the recognition and there’s a whole set of laws governing the so-called “probate” process, these days most assets pass outside of probate. What the will says does not apply in many situations, including: joint accounts that pass to the other joint owners, retirement plans and life insurance policies that go to designated beneficiaries, and property in a trust that passes to the beneficiaries named in the trust document. Only what you own in your own name alone passes under the will. In addition, while the will requires a lot of formality – two witnesses and a notary all signing at the same time – these other forms of passing on property usually require only the signature of the owner, or sometimes simply filling out a form online. If you plan properly to avoid probate, your will should be limited to serving as a failsafe in case other means of passing on property fail.
A revocable trust, sometimes called a “living” trust, is a construct under which one or more people, the trustees, manage property or investments for the benefit of one or more people, the beneficiaries. In a revocable trust, typically at the start the same person acts as the creator of the trust, the grantor or donor, as trustee and as beneficiary. Not much changes in their lives after they set up the trust. But it avoids probate by naming successor beneficiaries after the initial beneficiary passes away. Not all probate actions are the worst thing that can happen, but some are, and avoiding it can save heirs time and trouble.
But more importantly, a trust is a terrific tool for intervening in the event of incapacity. Financial institutions that are resistant to accepting durable powers of attorney appear to be more comfortable with trusts when a successor trustee is named. It works even better when a parent names one or more adult children as co-trustees. The parent then does not give up any rights or autonomy, but permits the child to begin participating in financial management. Even if the child does nothing, he or she can view accounts and step in immediately if a problem arises. This can be especially important in the event of dementia or scams. Seniors are the primary victims of scams and having a trusted family member with access to accounts can help identify scams and permit intervention to limit their effect.
In addition to probate avoidance and incapacity protection, trusts are infinitely flexible in terms of how they are drafted. They can state any number of specifics on who receives property when, for instance, permitting its distribution over time to children and grandchildren. The options and opportunities for creativity are limited only by your imagination.
As you can see, most of these documents are about life not death. Of course, they’re still about planning for an unwanted event – incapacity of some sort. It’s like insurance to make sure that you and your family are taken care of if an unfortunate accident occurs.
At LawyerLisa, we guide our clients through the estate planning process and make recommendations on the correct type of trust, power of attorney, and other legal documents needed for each unique family situation.
If you are interested in learning more or if it’s on your New Year’s Resolution list to get your plan in order, contact us to schedule a consultation today! Appointments can be made by clicking here or calling our office at 803-563-5163.
For more information on estate planning, please visit LawyerLisa.com.
Lisa Hostetler Brown
5175 Sunset Blvd. Ste#1 Lexington SC 29072
Serving the state of South Carolina
Firm’s past performance and experience does not guarantee future results.