There are many tools we can use to create an estate plan that suits your needs. Below we have explained some of the most common tools we use to create an estate plan.
A Will allows you to choose who will receive the property you own at the time of your death. These people named in your will are called “beneficiaries.” A will also enables you to arrange for payments of certain expenses and to designate the person you would like to handle distributing your property.
A will can be changed or revoked at any time, but there are specific requirements for how a will can be created, revoked, or changed.
A trust is a legal document that enables a third party, known as a trustee, to hold assets. A trust can hold financial assets, such as bank accounts, stocks, or bonds. A trust can also hold real property, such as land, houses, even vehicles. Trusts are very customizable in that you can retain control of the property and dictate how it is to be used. Another benefit of trusts is that they often avoid the probate process, thereby saving money and protecting your family’s privacy.
Financial Power of Attorney
A Financial Power of Attorney allows you to choose a person who could handle your finances. A financial power of attorney authorizes the person you choose (Often referred to as an “Agent” or “Attorney-in-Fact” to handle finances for you. A power of attorney does not take away your ability to continue handling your own finances, it just authorizes another person to act for you. It is very important that you only name someone you trust completelyas a power of attorney. Because they can do anything you could do, and third parties (such as banks) are protected from liability if they do something the agent asks them to do, naming the wrong person on a power of attorney can have disastrous financial consequences. There are two main types of Financial powers of Attorney.
The first type, often referred to as a “General” power of attorney, allows a person to handle your finances from the day you sign the power of attorney; it is effective immediately. This allows someone else to manage your accounts, pay bills, and, in short, do anything you could do with your own finances from the moment it is signed.
The second type, a “Springing” power of attorney, only becomes effective when a physician certifies that you are unable to make or communicate decisions regarding your finances. This offers some additional protection; however, it is still very important that you only name a person you trust completely. Third parties such as banks do not have a duty to investigate whether you are truly unable to make decisions, and they are protected from liability if they do something your named agent tells them to do.
Financial powers of Attorney can be changed or revoked at any time if you are of sound mind and in good health. , You would simply send a signed, dated letter to the person named as your power of attorney, along with any financial institutions you or your agent do business with. This letter would need to inform them that you revoke your financial power of attorney and state that the person you named as your agent is no longer your agent.
Healthcare Power of Attorney & Advanced Directive
A Healthcare Power of Attorney names someone to make healthcare decisions for you if you are unable to make or communicate such decisions yourself. A healthcare power of attorney is often prepared alongside an Advanced Directive. Simply put, the healthcare power of attorney deals with the “Who” : Who would you want making healthcare decisions if you couldn’t do so? The Advanced Directive addresses the “What” : If there were no chance of your recovery, what treatment decisions would you want made?
People often confuse an advanced directive with a Do Not Resuscitate order, or “DNR.” They are two very different documents. A DNR lets a hospital know that they should not try certain treatment, including CPR, for a specific patient in any circumstance. An advanced directive does not prohibit treatment, rather, it tells your doctors (and family) what treatments you would want continued or withdrawn if there was no reasonable hope of recovery.
Your healthcare power of attorney and/or advanced directive can be revoked at any time, so long as you are of sound mind. To do so, you would simply send a signed, dated letter to the person named as your healthcare power of attorney, along with any medical institutions or doctors you see, and inform them that you choose to revoke your healthcare power of attorney and advanced directive.
Transfers by Operation of Law:
If a person dies without a will, their property passes according to the laws of intestacy.These laws in each state determine how a person’s property will pass to their relatives and spouse. If a person has a valid will, all of a person’s property can be divided through that will. There is another way to transfer property upon death. These mechanisms transfer property by “Operation of law.” This means that if you choose to pass certain types of property through an operation of law, the property will be able to be transferred immediately upon your death without the involvement of the probate court. Usually all that is necessary is the death certificate, which the designated beneficiary would then take to the appropriate office. Some common ways to transfer property by operation of law are listed below.
A Beneficiary deed is a document that transfers ownership of real property; land or a house. If you own a home or land, a beneficiary deed allows you to designate who would own that property after your death. A beneficiary deed must be properly executed and recordedat the recorder of deeds’ office in the county where the property is located. It is not valid unless it is signed by the owner(s) in front of a notary ANDrecorded at the appropriate office. A beneficiary deed is revocable; you may revoke it in writing at any time at your local recorder of deeds’ office, provided you still own the property and are of sound mind. It is best to have an attorney help you with this document, as it is very important that technical requirements are met. It is also important that you provide your attorney with an accurate copy of the legal description of the property. This can be found on the deed to your property. If you do not have a copy, you can obtain one at your recorder of deeds’ office. If you do not execute a beneficiary deed, the property can still pass through your will.
Transfer on Death
If you own a vehicle, you may know the person whom you would want to receive that vehicle upon your death. You may wish to go to the Department of Motor Vehicles office and indicate that choice on your title to the vehicle. Placing transfer on death, or “TOD” on your title designating the person you wish to give the vehicle to allows the vehicle to pass to the person immediately upon your death. If you do not place a TOD on your vehicle, it will still pass through your will, or, if you do not have a will, according to the laws of intestacy. The advantage of passing the vehicle through a TOD is that, by giving it to the chosen person through the TOD, it is a quicker process that does not require the involvement of the probate court. This can be done at the DMV office, no attorney is required. However, you should contact your local DMV to find out what fees they charge and what documents you will need.
Payable on Death- Accounts & Safety Deposit Boxes
If you own bank accounts, savings accounts, or Safety deposit boxes, you may wish to designate them to be paid out to a certain person upon your death. “Payable on Death,” or POD, is a designation you can put on your account(s). You should usually name the intended beneficiary on each account or safety deposit box. This does not require an attorney, and can be done through your local bank. It is usually better to put POD than to simply add another person to your account. This is because POD only gives that person access to the money after your death, you can make changes at any time if you are of sound mind, and that person’s creditors cannot pursue the money in the account if they are only listed under “POD.”