Estate planning is one of those important things adults need to do. There are so many elements to consider when creating an estate plan. The Will is the most well-known and a very important piece of the estate planning puzzle. Today we’re taking a look at the Will and how it fits into your estate plan.
Last Will and Testament
The Last Will and Testament is a crucial part of estate planning. Everyone needs to have a Will! But how a Will functions within your estate plan really depends on what other elements you have.
The Will is the only estate planning document that allows you to name a legal guardian for minor children or special needs loved ones under your care. If this isn’t designated in the Will the Court will have to name a legal guardian or make your loved ones wards of the state. You can imagine how traumatic this would be for your child. They’ve just lost you and because proper estate planning was not done they are now in a foster home. Every parent needs a Will for this fact alone.
The purpose of your Will is to make your wishes known and alleviate stress and pressure on your loved ones at your death. Your loved ones are already mourning your death. Clearly outlining your wishes and having a plan in place can ease the burden and even bring joy and gratitude to your loved ones. You cared enough to face your death before you died, and you loved them enough to not leave a mess.
If your Will is the only estate planning tool you are implementing, it is also the document that designates what happens to all of your assets upon your death. However, if you are also utilizing a Trust, the Will is a backup plan— designed to catch anything that is left outside of the Trust.
Trusts
Trusts operate similarly to Wills in some ways, and very differently in others. A Trust is a legal contract between you, the trust maker, and your trustee. Unlike a Will, a Trust goes into effect the moment it is signed. Your Trust outlines how your assets— whose ownership has been transferred to the Trust— are to be utilized during and after your lifetime. There are rules in place for while you are living and then rules for after your death.
A Trust is often associated with the ultra-rich. We’ve all heard and likely used the term “trust fund baby”. But people with average salaries and who grocery shop at the same stores as you can also benefit from a Trust.
The purposes of a Trust are many, from personal control of finances to limiting tax liability. But within estate planning one of the greatest and most joy giving purposes of using a Trust is to avoid the hassle of probate. When a Trust is fully funded and used perfectly, your assets flow through the Trust to your beneficiaries without going to Court. A Trust is like a breath of fresh air to your loved ones. A Trust says to your loved ones “your time matters, so I’m doing my best not to waste any of yours.” A Trust is a beautiful love letter to your children because everything is carefully thought through and planned for. And you have the Will, in this case called a Pourover Will, there to catch anything that might have slipped through the cracks. This Pourover Will designates your Trust as the beneficiary of anything that falls outside the Trust— allowing these assets to be handled the way your Trust outlines.
Power of Attorney
A power of attorney is an estate planning tool that allows you to designate an agent to make legal and financial decisions on your behalf. You can give this agent that authority immediately upon signing or it can be springing. Springing means it springs into action when a certain even occurs— such as incapacity.
Power of Attorney documents are very important for the normal daily functioning of your life, especially in an emergency. For instance, say you are hurt or become very ill. Your adult children need access to bank accounts to pay your expenses. If you have already given them power of attorney, this is done and life can operate smoothly. If you haven’t, they will either have to petition the Court to allow them to do this— which could take more time than they have— or they may have to trouble you with the hassle of signing checks.
Advance Directive for Healthcare
This is, perhaps, the most loving bit of estate planning you can do for your loved ones. The Advance Directive for Healthcare serves two purposes.
One, it allows you to name a healthcare agent to make medical decisions on your behalf if you are unable to do so.
But more importantly, this document allows you to pre-select any catastrophic care decisions as it pertains to your medical treatment. It allows you to make decisions regarding life support, CPR in a coma, and ventilators— among other things.
Put yourself in the shoes of your spouse or adult children. Something tragic has happened and you are in a coma on life support. The doctors have determined there isn’t brain activity and they don’t expect you to come out of this. They are asking your spouse and children how they would like to proceed. If you had an Advance Directive for Healthcare, you would have already made this decision. They don’t have to live with that choice, because YOU made that choice— whatever that choice may be. Please get an Advance Directive for Healthcare.
Standby Guardian
A Standby Guardian is a legal document that designates who should have temporary care for your minor children while you are living in the event that you cannot care for them. This is a temporary guardian— not the long term guardian in the event of your death. This person needs to live close by. They can be called and quickly get to your children if you cannot. They may be the same person as your long-term guardian in the case of your death, or they may be a neighbor, a friend from church or the gym, or a relative that lives nearby.
How Does My Will Fit Into My Estate Plan
Your Will is a crucial part of your estate plan. It is either the primary way to distribute your assets after your death, or it is the failsafe in case something is left outside your Trust.
And your Will is the only way you can designate the long-term guardian for your minor children or special needs loved ones under your care.
Your Will gives you peace of mind now, but it also gives your loved ones a plan to implement after your death. And having a good plan in place is a gift to a person who is lost in grief. Grief makes decision making and paperwork difficult. Your Will, especially when paired with a Trust, helps to limit the amount of both of those things.
Call us at (404) 736-6066 to schedule a consultation about how we can help you alleviate stress from your life now and your loved ones lives after your death.
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