What Exactly Is A Will? Should A Will Be Part Of Every Estate Plan?
A will is an old document, and years ago, that was really the only method that we had for estate planning. I still put a will in every estate plan that I do. However, we have new instruments and new documents that are far superior to just having a will. A will gets the job done. It will accomplish your division of property the way you want it. But wills are still required to go through the court system. If you have a will, you have to open a probate estate in court, and the court will supervise the distribution of that will. It’s a very cumbersome method of dividing the property. Again, I still put a will in every estate plan. However, the main vehicle that I use in estate plans are trusts.
People used to believe that only rich or wealthy people had trusts, but that’s not the case. The trust is a far superior vehicle in estate planning because it completely avoids the court system. I still like to have a will there, in the event that there are some items of property that may have been acquired after I put a trust in place. We still need to have a will there as a catchall. But, it’s really just a safety net, because when I prepare an estate plan, everything is put into the trust so that we can avoid the court system.
What Are The Common Types Of Trusts And What Are Their Purposes?
With most people, I do a living trust or a revocable trust. A trust is a document that you put your property into. In other words, a trust allows you to title your property in the name of the trust. For instance, if you have a house, instead of your house being held in the name of John and Judy Smith, it’s held in the trust of John and Judy Smith. The same applies for a bank account or a brokerage account with stocks and bonds. The owner of these various assets is the trust. The trust, however, is completely controlled by the individual. So, later on, if the individual wants to change something about it, that’s not a problem, it’s very easy, a trust can be changed. The trust can be revoked. It’s not a situation where we put these assets into the trust, we can never get it out, and all control is lost. We have absolutely 100% control.
Even while you are still alive, you can move assets in and out. You can sell assets, buy assets, put money in, take money out. Revocable trusts are very flexible, and they allow people to carry on with their day to day lives without ever really thinking about it. When you pass, everything is lined up perfectly, and the estate will seamlessly transition to the heirs.
What Are Some Other Documents That Are Necessary To Include In An Estate Plan?
In estate planning, there are multiple documents. The main document is the trust. Sometimes it’s a revocable trust or living trust. That’s the main vehicle that we put all the assets in, and that’s the main vehicle that dictates how the assets are going to be divided. It will name who they’re going to and who’s going to be the trustee. In other words, who’s going to be in charge of everything once the individual creating the trust passes away. I also prepare several other documents, even though we don’t want to have to use them, I still do. A will, for instance, is a catchall. If an individual, for whatever reason, acquires a piece of property after we created the trust, isn’t titled in the trust, or somehow isn’t controlled by the trust, we still want to have a will so that we can control that piece of property.
I also prepare documents relating to medical care. I like to do a power of attorney for medical care. It instructs or names an individual. Sometimes it names doctors if you have a particular doctor. Basically, it names the individual who’s going to make decisions in the event that you’re unconscious or incapacitated in some way or another on your behalf. The individual named as the power of attorney is going to decide what your medical care is going to be. Sometimes if people are older, we may do what’s a DNR, a do not resuscitate. It’s rare, but sometimes people want to be resuscitated.
We can also do a power of attorney for property. That document would go into effect upon incapacitation, and it would allow the power of attorney to manipulate and control property pursuant to the individual’s request in the event that they are still alive. This suite of documents puts everything in order, and allows the most flexibility to manage and control assets pursuant to the request of the individual creating it.
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