You probably heard the term ‘estate plan’ being tossed around many times. However, do you know the true meaning of it? Do you know what documents and information should be contained within your estate plan?As we open up the year it is important to think about your estate plan, whether you have one and whether it meets your needs. Below you will find some basic information on what documents should be included in an estate plan and what each document could be used for.
General Durable Power of Attorney
A General Power of Attorney gives the agent(s) you name, the authority to act on your behalf in matters of finances, assets, and debts. Your agent can write checks, pay your bills, manage your accounts, and file your tax returns. They have a fiduciary duty to protect your best interests and to keep track of the actions taken to fulfill that duty.
Power of Attorneys can also be prepared for limited purposes and limited amount of time, such as sale of property or handling certain financial affairs, for a limited amount of time, if you are unable to do so yourself.
Health Care Power of Attorney
Health Care Power of attorney agent is empowered to make decisions regarding your health and medical needs if you are unable to make them yourself. Your health care agent(s) is responsible for ensuring that your wishes are followed. You make put in any specific instructions you have for the agent(s), within the document.
You may also wish to draft a Living Will or other advance medical directives that addresses your wishes regarding medical procedures and possible end-of-life care. Similarly, to a Health Care Power of Attorney, you will name an agent(s) who will ultimately be responsible for making the decision and ensuring your wishes are followed.
Last Will and Testament
Wills are intended to help distribute a person’s assets to his or her heirs upon the person’s death. Will is a legal document that records your wishes regarding the transfer of your assets, care for minor children, and many other considerations. You will be required to appoint an executor to handle your estate, allocate your assets to your heirs and beneficiaries, and make any donations you wish to make to charities.
Similar to a Will, a Trust is used to distribute client’s assets. Unlike a Will however, a Trust can take effect immediately upon creation, allowing for property to be transferred before the creator’s death. You can include spendthrift provisions in your Trust if you are concerned about a beneficiary handling the money inappropriately. For any beneficiaries under 18, you will need to appoint a trustee to control the assets in the minor’s trust and to only use the funds in the minor’s best interests. When the beneficiary turns 18, the remainder of the trust can be paid out in full, or it can be transferred into a different trust for the benefit of the beneficiary. Creating a trust allows you to save probate court costs as it does not require court involvement to handle and distribute assets.
Transfer on Death Affidavits
Leaving a residential real estate in a Will requires the Will to go through probate before the property can be transferred. This can take months before the property is transferred. To avoid that, a Transfer on Death Affidavit can be used. This allows the chosen beneficiary to receive the interest in a residential property quickly by simply filing an Affidavit with the death certificate attached.
We Can Help
Have more questions about your options for an estate plan? Call Sobon Law, LLC today (216) 586-4246!