A lot of people think that “estate planning” is a fancy way of describing the process of creating a last will. In fact, there is a lot more to it, and a last will is really not the right vehicle of asset transfer for many people. We will elaborate on this in another section, but we will first explain why you may need more than one type of will when you plan your estate.
Life Support Preferences
This is really not a very pleasant subject to contemplate, but you should address end-of-life issues when you are planning your estate. In some cases, the medical community can keep people alive indefinitely through the utilization of artificial means. Artificial respiration, nutrition, and hydration can prolong your life, and there are procedures like dialysis and resuscitation.
If you do nothing to prepare for this eventuality in advance, your next of kin would be forced to make this excruciating decision on your behalf if you are in a life support situation. More importantly, your own true wishes should be carried out if you are ever in this condition.
You can state your preferences in a living will, so you should definitely include this document in your estate plan. A living will is an advance directive for health care, and there is another directive that should be part of your comprehensive incapacity plan. A durable power of attorney for health care or health care proxy can be added to empower an agent to make medical decisions on your behalf.
This is necessary even if you have a living will, because a situation can arise that is not related to the utilization of life support. In addition to the health care proxy, you should add a HIPAA release form. The acronym stands for the Health Insurance Portability and Accountability Act, and this law prevents health care providers from sharing your medical information unless you sign a release form.
Pour Over Will
In the opening, we touched on the fact that many people that think that a last will is the right choice would be better served by a different asset transfer tool. The device that we were referring to is a revocable living trust. A revocable living trust can be used to avoid some of the drawbacks and limitations that go along with the utilization of a last will.
When you establish a revocable living trust, you fund the trust by essentially making the trust the owner of your property. While you are alive, you can act as the trustee and the beneficiary, so you have total control of the assets. Over the years, you may acquire property that you never conveyed into the trust for one reason or another.
To account for this, when you create your estate plan, you can include a legally binding document called a pour over will. After you pass away, this document would allow the trust to absorb assets that you did not convey into it while you were living. This will streamline the estate administration process.
The last type of will that we will look at here is called an ethical will. These documents date back to biblical times, and they are part of the Judaic tradition. This being stated, in our modern era, ethical wills are utilized by people from all backgrounds.
Throughout your life, family members have invariably approached you from time to time to seek guidance. When you are gone, you will not be around to share your wisdom. To account for this dynamic, you can share your moral and spiritual values in writing in an ethical will. This can be a valuable addition to your estate plan, even though the document would not be legally binding in any way.
Download Our Free Estate Planning Worksheet!
If you are here on our website, you are interested in learning all that you can about the estate planning process. We update this blog on an ongoing basis, so you can always build on your knowledge if you pay us a visit. Plus, in addition to the blog, we have other valuable resources on this website that you can access free of charge.
One of them is our estate planning worksheet. This tool has been carefully prepared by our attorneys, and you can really gain a thorough understanding of the process if you take the time to go through it. Once again, it is being offered on a complimentary basis, and you can access your copy if you click the following link: Free Estate Planning Worksheet.
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