Every estate plan needs a will. Even a more complex estate plan establishes a will as the basic building block. A will, simply put, is a letter of direction to someone in whom you have confidence to distribute your property according to your instructions. You will also names the guardian for your minor children.
Your will should be prepared or reviewed by an attorney to be sure that it meets the legal requirements of your state and carries out your wishes. Without a will you are leaving important decisions with spiritual implications for state law and the courts to decide.
The Revocable Living Trust
The revocable living trust is another building block which is used in many estate plans. This type of trust is established by transferring most of your assets into the trust while you are alive, and, like a will, distributes those assets at your death. Unlike the will, the trust takes effect as soon as you sign the document, whereas the will does not take effect until the time of your death. The trust is manages by a trustee whom you designate in the trust. The trustee can be your self, your spouse, a relative, a bank, or an individual you choose. The trustee will be limited to the powers you give him or her.
The revocable living trust provides many benefits. Any property that is in the trust at your death will avoid the probate process. The revocable living trust also keeps your financial matters private and confidential, and it allows you to name someone who will manage your affairs should you become incapacitated.
There are numerous kinds of trusts that are designed for specific purposes. These trusts can be planned for specific purposes. These trusts can be planned to care for your spouse, your children, special-needs dependents, your business, and charities. These trusts can be established while you are alive or at your death; through you will, or revocable living trusts, or as separate documents. Some of these trusts can avoid capital gains tax and estate tax.
Power of Attorney
There are other documents you may choose to include in your estate plan. One of these is the power of attorney. This document give someone, named by you, the authority to act on your behalf regarding your legal maters. You can control the degree of their authority through the document.
If you own a business, you have a whole set of extra issues. Buy/sell agreements, key employee insurance, and contingency plans are all worth consideration and must be carefully drafted and reviewed for tax implications. If you are planning on selling your business or transferring ownership to your children, there are specially designed trusts to allow you to do that without paying capital gains tax.
Living Wills/Health Care Powers of Attorney
These documents are designed to express you desires concerning your medical care should you become incapacitated. They can give specific instruction to you medical doctors and family members who know your position concerning these issues. State laws vary on these documents, so care in the preparation of these documents is warranted.
If you have younger children, own a business, or are funding a trust, it is wise to review you life insurance and disability insurance needs.