An Estate Plan is a set of legal documents which outlines how your assets will be managed if you become incapacitated (i.e., unable to manage your own assets after an illness or injury) or pass away. Most Estate Plans consist of a Will, aTrust, a Durable Power of Attorney, beneficiary designations, a letter of intent, a Healthcare Power of Attorney, and a guardianship designation if you have minor children.
A Healthcare Representative (or Healthcare Power of Attorney) is someone you authorize to make decisions about your healthcare if you are unable to do so. You must document this authorization, and in most states, this document must be signed and notarized by a notary public in order for it to become a legally binding document.
A Financial Power of Attorney is someone you appoint to handle your financial matters when you are unable to mentally do so or after you pass away. When you give someone your “power of attorney” they are also referred to as your “agent”. Typically, a Financial Power of Attorney document must be signed and notarized by a notary public in order for it to become legally binding.
If your children’s other parent is still living, they will typically gain full custody unless guardianship has been terminated by a court of law. Even if you are unmarried and currently have full custody of your children, their surviving parent is in most cases considered their natural guardian. If your children’s other parent is not still living, you may appoint a trusted person to serve as their Guardian until they reach legal adulthood.
Also known as an Advanced Directive, a Living Will is a document that expresses your desire to not have your life artificially prolonged through life-sustaining procedures. This directive requires that two (2) physicians agree that your medical condition has reached a point of no return and directs them to withdraw life support systems or withhold using them in the first instance.
A Joint Trust is a single Trust that is established and funded to cover a married couple or individuals in a Civil Union. Joint Trusts are typically less complicated to set up and maintain than Separate Trusts and are useful in cases where both spouses wish for the surviving spouse to inherit all assets when one passes away.
Yes. In your Will, you can designate certain assets as “specific assets,” and they will be treated as distinct and separate assets from the rest of your estate. For example, you may wish to leave a car or jewelry collection to a specific person after you pass away. In your will, you should designate those items as “specific assets.”
Probate is the set of legal activities that a Probate Court must complete after you pass away. These actions include the process to have your Will legally recognized and authenticated as well as reviewing your assets and determining the inheritors. In some states, Probate is not a required process or may only be required if the value of an estate meets a certain minimum.
A Trustee is the person responsible for managing the assets owned by a Trust for the benefit of the beneficiaries of the Trust. Everything that the Trustee does in this role must be done in the best interest of the beneficiaries. For example, the Trust agreement may indicate that the Trust must be used to pay for a beneficiary’s education fees. In this case, the Trustee is legally bound to ensure that the funds are used for only that purpose.
Whiley both an Executor and a Trustee may be named in your Will, they often have different roles. An Executor is the person (or people) who have been designated to administer the Estate of the deceased. A Trustee, on the other hand, is responsible for managing any Trusts that are specified in the will. If desired, the Executor and the Trustee can be the same person.
When two people whether of the same or opposite sex are in a committed relationship but not married and have cohabitated for a certain period of time, they may be considered to be in a Domestic Partnership. The laws regarding domestic partnership vary, sometimes significantly by state.
While the laws differ by state, you should ensure that the person who you designate as your Healthcare Power of Attorney is a legal adult and has the mental soundness and capacity to handle the critical responsibilities of this role. Typically, people choose their spouse, a family member, or a trusted friend to serve in this role. Individuals who you should NOT choose for this role include the owner/operator of the care facility currently serving you, a spouse or employee of your healthcare provider (i.e., your doctor or your doctor’s spouse), a court-appointed guardian or conservator, a representative of a government agency which is financially responsible for your care (i.e., a Medicare representative).
Yes, the same person can effectively serve in both roles.
No. In some cases, people find it preferable to name independent third-party firms as an Executor or a Trustee, especially if skilled financial decisions will need to be made in the future. These firms charge for their services.
A Reciprocal Will is actually one of two separate Wills made at about the same time where both individuals leave some or all of their estate to each other. Typically used by married spouses, they make the same or very similar provisions for the distribution of their combined estate upon the death of the survivor. This is different than a Joint Will, where there is a single combined will and an implied contract, where the Will cannot be changed after the death of the first spouse/partner.
Often abbreviated as SNT, a Special Needs Trust or Supplemental Needs Trust offers provisions for the care of a physically or cognitively disabled individual. In some cases, the individual may already be receiving governmental or public benefits, and the SNT is a great way to ensure that the beneficiary can receive additional resources and care without disqualifying them from collecting public funds.
A Pet Trust is a legal document that designates a person to care for your pet according to your instructions after you pass away. You may also choose to set aside a sum of money for pet care and designate a trusted person (Trustee) to manage the money. You can also appoint a third-party to oversee the arrangement.
In a Will, you can provide your beneficiaries with an Option to Purchase an asset of yours after you pass away. If they decline to purchase the asset, it will become part of your estate’s residue. The Option to Purchase is usually used to ensure that a family business remains in the family, or to acknowledge and compensate a beneficiary’s contribution to a shared business.
A Civil Union refers to the legally recognized partnership between two individuals. Both same-sex and heterosexual couples can apply for a Civil Union. In most cases, members of a Civil Union can receive the same benefits and protections as spouses in a marriage, but this may differ from state to state. Review the local laws of your state to decide what type of partnership is right for you.
If you choose to designate compensation for your Executor or Executors, you must include provisions for this within your Will. Depending on state law, you may be able to deny compensation to the Executor that you nominate if you wish, and the Executor will either agree to serve in the role without any compensation or decline to serve as your Executor. There is no standardized amount of Executor Compensation that you should designate, but the laws differ by state.
While the laws differ by state, a minor can often acquire property rights and assets. In some cases, the minor might not have access to the property or assets until their 18th birthday, but they will still typically be the legal owner of the asset.
An estate is considered Insolvent if the value of your assets is less than the debts that you leave behind after you pass away. Typically, your debts will not be inherited by your family if they are solely in your name, but your Executor may have to file for bankruptcy on your behalf to have your debts discharged.