Planning for the future with Wills, Trusts, Power of Attorney and Living Wills.
Estate planning is vital so that you can protect yourself and your assets while ensuring that your family or other chosen beneficiaries will be provided for in the event that something happens to you. Planning your estate may help you to take care of your family, plan for incapacity, transfer your assets to your beneficiaries quickly and minimize your expenses. A good estate plan should include several different components. Determining the particular tools that will be most beneficial to you and to your family is important. Your estate plan may include a will, trust, powers of attorney and living wills. Your estate planning attorney may advise you on the tools that will be most appropriate for your individual needs and those of your family.
Understanding a will
Many people make the mistake of failing to draft a will. Regardless of age and net worth, just about everyone needs a will. When people die intestate, their assets are passed to their heirs according to the intestacy laws of the states in which they live. This can result in your assets being transferred in a manner that goes against your wishes, and it can also result in increased costs.
What a will is
A will is a legal document that you can use to control what will happen to your assets and to your family when you pass away. Your will is a place for you to put down your thoughts and to direct how and to whom you want your assets distributed. You can also use your will to establish guardianship for your children in the event that you die while they are still minors.
Drafting a will
Your will must be drafted according to specific legal requirements under your state’s laws. We specialize in drafting wills for people in Florida and Pennsylvania. If your will is not drafted and signed correctly, it may be declared to be invalid by a court. This would result in your will being disregarded and your assets passing as if you did not write a will.
Once you’ve drafted a will, it is important that you don’t simply stash it away. You should review your will on a regular basis with your estate planning attorney. Whenever you experience a major life change, you should be prompted to review your estate plan and to make changes as necessary. Examples of life changes that should prompt a review include the following:
- Having a new child
- Getting divorced
- Getting remarried
- Death of your spouse
- Buying a new home
- Opening new accounts
- Changing Domicile or Residency to a new state
By reviewing your will and making the needed changes, you can avoid potential problems such as accidental disinheritances, assets that are not included in your will and passing your assets to a former spouse. One caveat to understand is that when you die, your assets that are transferred via a will have the potential to go through the probate court process. To learn more about probate and how you might potentially avoid it, click here.
What is a trust?
Another tool for you to consider when you are thinking about planning your estate is a trust. A trust is a fiduciary agreement through which you designate a third party to use the assets that you place in the trust to benefit your family or other designated beneficiaries. The third party who manages a trust is called the trustee, and he or she will have several fiduciary duties.
Types of trusts
There are two primary types of trusts along with multiple subcategories. In general, your trust may be irrevocable or revocable. An irrevocable trust cannot be changed by you after it has been established. With this type of trust, you relinquish control over the assets that are contained in it. A revocable trust is one that you are able to modify or terminate after it has been established.
If you have an irrevocable trust, the assets that are contained in it will no longer be considered to be a part of your estate, so it is sometimes chosen by people who are close to the federal estate tax exemption limit. Assets you hold in a revocable trust are still considered to be a part of your estate and may thus be considered for estate taxation purposes. A revocable trust may be amended or modified during your life, and is one tool that can be utilized to avoid probate.
Determining whether a will or a trust is better for you
Both a will and a trust have advantages and disadvantages associated with them. Understanding the differences may inform your decision about which might be a more appropriate choice. A will is generally cheaper to prepare and takes less time to draft. If your estate is not large, the cost of establishing a trust may exceed the amount of money that you might save by avoiding the probate process. However, a will is subject to the supervision of the probate court and its process, which is one disadvantage that some people want to avoid.
A trust may be used to help you to avoid probate, which can be expensive and may take a significant amount of time. This may help you to ensure your assets will be passed to your beneficiaries outside of the probate court in potentially a faster and simpler process, easing the complexities of your estate’s administration. A trust will have a higher upfront cost, take more time to create, and must be funded properly and completely. The lack of court oversight could be either a positive or negative, depending on your family circumstances. However, a trust can be used to eliminate multiple probates such as what might occur if you own assets in several states.
Power of attorney
In addition to a will or a trust, another important document that you should include in your estate plan is a power of attorney, or POA. A POA allows you to designate a trusted third party who will be able to make important financial or health care decisions for you if you become incapacitated. It is a powerful document, and you may use it to eliminate the need for guardianships. A POA is a sophisticated tool that should be drafted carefully. You should make certain that you only choose to give it to a person who is highly trustworthy. A POA may be used to plan for emergency elder care in the event that an incapacitating event happens.
In addition to a financial POA, your estate plan should also contain a health care POA. This can allow you to designate a trusted third party to make important medical decisions on your behalf if you are unable to make them yourself. You should also make certain to have a living will in place so that your wishes regarding the medical care are known and followed.
What your estate plan should include will depend on your circumstances, the size of your estate, your wishes and the needs of your family and loved ones. We can discuss your needs and goals with you, analyze your estate and make recommendations about the documents that might be best to include in your estate plan. A complete estate plan should pass your assets to your desired beneficiaries in the most efficient manner, while contemplating the tax ramifications of the distributions and protecting the assets for future generations. Contact us today to schedule your consultation and to learn more about your estate plan.
Thomas & Pinnacoli Law
Estate Planning & Administration, Tax & Elder Law Firm
789 SW Federal Hwy, Suite 308
Stuart, Florida 34994
Tel: (772) 324-5656
Fax: (772) 210-1272
345 Wyoming Avenue, Suite 200
Scranton, PA 18503
Tel: (570) 963-8880
Fax: (570) 963-9372