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Trust and
Estate Planning
Everyone has an estate plan; it’s
just that some people plan to give the courts and others the
power to decide what will happen to their children, themselves, and/or
their assets when they die or if they should become disabled.
But it doesn’t
have to be that way. Proper estate planning can help you protect
yourself, your family and/or your business from these losses and
disruptions by allowing YOU to control what will happen if you become
disabled or when you die.
Estate planning can be as simple as
deciding how your various assets like bank accounts or real estate
should be “titled” to carry out your goals such as saving on taxes,
avoiding probate or maximizing your control over your property.
Or it can include the preparation of various documents like:
Wills
Trusts
Durable Powers
Advance Health Care Directives
The most important thing about your
estate plan is that the various tools you employ need to harmonize
with one another, and each needs to reflect your
goals for how you want to protect your children, your assets and
yourself in the event you die or become disabled.
While it is true that none of us
knows exactly how long we’ll live, the advantage of estate planning is
that it gives you control over an otherwise unknowable situation. It
allows you to “call the shots” while you can. And, like every other
aspect of your overall financial plan it is worth the effort because
not taking the time to plan may mean the hard work, risk and patience
that went into building your assets can easily be squandered.
Wills
Wills are documents that set out a
plan for how your property will be distributed upon your death, and
who will take care of your children if they are minors and they have
no other legal guardian. A properly drafted will determines how you
want these issues decided so that a court will not have to second
guess your wishes or you won’t have your property going to unintended
individuals. It is important to note, however, that wills DO NOT help
you avoid the probate process.
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Trusts
Trusts are documents that let you
create a plan for how your property will be managed if you become
disabled and after you die. Trusts can serve as substitutes for wills
if your only goal is avoiding probate.
Trusts can also be used to create a
careful and highly customized plan for how you want your property
managed, invested and distributed for the benefit of others, perhaps
for many years following your death.
Trusts can be created to take
effect upon your death or while you are living. The latter type is a
Living Trust. The chief benefit between a Living Trust and those that
only take effect after you die is that Living Trusts can be used to
avoid probate and provide for the management of your assets
should you become disabled. By contrast, either type of trust can help
you avoid, minimize or defer the payment of estate tax.
Living Trusts can also remain fully
revocable while you are alive. For those assets owned by you that
would like to have managed and would otherwise be subject to probate,
you must transfer ownership of those items into the name of the trust.
Once done, however, you can freely remove those assets from your trust
and add new ones to your trust at any time during your life.
Other types of trusts can be
created for individuals and families with larger estates that require
advanced gift and estate tax planning (e.g. life insurance trusts,
charitable trusts). Still other types of trusts may be created to
protect oneself or one’s friends or family members who have Special
Needs.
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Durable
Powers of Attorney
By preparing a Durable Power of
Attorney for Property Management you can create a document to
appoint an “agent” to take charge of your financial affairs should you
later become disabled. This can avoid a court from having to appoint a
conservator for you. Durable Powers can take effect either
immediately, or upon a later finding that you are incapacitated, and
in either case you can choose how expansive or restrictive those
powers should be. Examples of the various powers you can give to your
agent might include the power to sell your home, defend your estate
from lawsuits, invest your money or manage your retirement plans. Even
though you may have a trust which is designed to manage your property
should you become disabled, a Durable Power of Attorney may become
necessary if you own any property such as a life insurance policy or
retirement plan which does not become a part of your trust estate.
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Advance Health Care Directives
By preparing
an Advance Health Care Directive you can create a document
appointing an “agent” to make critical life and death decisions for
you once you are no longer able to communicate them. By making these
decisions in advance, like the circumstances for when life sustaining
procedures should be used, whether or what organs you want donated or
arrangements for your burial or cremation, you free your family and
health care providers of the tremendous stress and burden of having to
second guess your wishes.
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