When thinking of creating an estate plan, here are a few things to consider before finalizing your final wishes:

Should you create a Will or a Trust?

The essential difference between a will and a trust is that a trust avoids probate. The probate process involves an executor filing a petition at the appropriate court to seek appointment as the executor. Then, filing a detailed report about the estate and its assets with the court. The process can be lengthy and time-consuming, and information about the assets becomes public. As such, many people will choose to create a trust rather than to create a will. Another important consideration when making a trust is, once the trust is created the assets listed will need to be re-titled to the name of the trust.

For example, if you own real property that has a deed, a new deed will need to be prepared and recorded at the county clerk’s office in the name of the trust. Note, that it is not necessary to include assets in the trust that already have a named beneficiary, such as a life insurance policy, as these assets are already avoiding the probate process. However, if you choose to include these assets, you will need to revisit the instruments to make sure that the trust is named as the beneficiary.

Should you create a Power of Attorney?

A power of attorney is a document giving written authorization to another person to handle your affairs and to sign on your behalf. The power of attorney can be springing (effective at a future date) or effective immediately. In the power of attorney, the person creating the document is known as the principal and the person or persons receiving the powers are called the agents. In the power of attorney, the principal will need to initial next to the grants of authority that they are giving, indicating which powers his/her agents should have. Additionally, the principal can indicate in the power of attorney whether the agent should be compensated and/or whether the agent can give gifts to third parties. The principal may also indicate if a monitor should be appointed to oversee the agent’s activities. This document may be revoked if the principal no longer wants the agent to have the power.

Should you create a Living Will/Healthcare Proxy?

A living will is a document in which the principal chooses someone to make healthcare decisions if he/she is not able to make them for himself/herself. In addition, the principal can express their wishes regarding end-of-life treatment and periods of incapacitation.

What Would Happen If You Died Without a Will or Trust?

If a person dies without a will or trust, his estate will pass under the intestacy statute. A person is deemed to have died intestate when they die without a valid will or trust. Under the intestate statute, the state law determines who will inherit the deceased person’s property based on the person’s relationship to the deceased person. Typically, the deceased person’s blood relatives and next of kin are legally entitled to inherit under the law. This process can be complicated if the deceased person’s relatives are difficult to locate. If no living relatives can be found, the decedent’s estate goes to the state.

What Assets Are Not Subject to Probate or Are Not Affected by the Laws of Intestacy?

These assets include a living trust, real estate owned as tenants by the entirety, and property held jointly with rights of survivorship, life insurance proceeds, IRA and other retirement accounts, stocks, and bank accounts that are payable on death.

Who Will Take Care of Your Minor Child When You Die?

If you have minor children, you should appoint a guardian for your minor child or children in your will. When a person dies, the guardianship of your child(ren) will be left to the other parent, if then living. In the event both parents are deceased and there is no will in place, the court will look at what is in the best interest of your child when appointing a guardian.

Hiring an estate planning attorney who has a good understanding of state law can assist you in making the right decision for you based on your needs and objectives. Working with an attorney can make what is a difficult task seem much smoother.

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