For Mark Roberts’ Use: Many people don’t like to think about estate planning, but it’s a fact of life for all of us. Becoming familiar with the basics before meeting with an attorney or financial planner can help you narrow down your options and decided what you may need.
The two most popular estate planning tools are wills and trusts. Both can help you spell out how your property should be distributed after your death, but there are other reasons why you might need one or both of them.
Almost everyone needs a will. Aside from distributing your property, a will allows you to name the executor of your estate and designate guardians for your children. Failing to do these things will leave important decisions to be decided in probate court, and the outcomes may not be as you would have wished. Your property may also be subject to probate in certain cases, so a will may not be a 100 percent airtight document.
By comparison, a trust is not simply a document, but an actual legal entity. A trust also allows you to distribute your property as you wish, but with the added advantage of property management. You can also avoid probate by establishing a trust, saving your survivors a long and possibly expensive court proceeding. Not everyone needs a trust, but everyone with a trust should also have a will.
It’s important to remember that estate planning concerns incapacitation as well as death. In the event that you are unable to make legal and financial decisions, a durable power of attorney agreement allows you to select a person to make decisions for you. Another option is to create a health care proxy, which designates a person to make health care decisions in the event that you are unable to do so.
A living will, or a “directive” as it is known by physicians, allows you to state in detail the types of life-sustaining treatments you would choose if you were to become incapacitated. This allows you to decide ahead of time how long and under what circumstances you would wish to be kept alive on life support. In conjunction with other estate planning tools, a living will helps ensure that your wishes are carried out under all circumstances.