Estate planning performs important functions while you are alive and after you have passed. However, you have some important decisions to make before a plan can be completed.
Your will is just one document in a series that make up a complete estate plan. Other documents allow you to convey your wishes for medical and financial decisions, as reported in The (Beckley WV) Register-Herald article, “Important Medical and Financial Choices.” By making these decisions in advance and memorializing them in an estate plan, you save your heirs and loved ones a lot of stress.
There’s often confusion between the similar sounding Living Will and Living Trust. The first is for medical purposes, and the second is for financial needs.
A Living Will provides a trusted friend or relative with the authority to make decisions regarding certain last medical measures, when you’re in a terminal condition. This has nothing to do with transferring assets or property after death.
A Living (or Revocable) Trust is a financial vehicle that provides for the after-death transfer of ownership of trust assets like a will, but has lifetime and after-death control of the trust’s assets by a trustee.
Another important estate planning document is a power of attorney (POA). This document gives an agent the authority to make medical and financial decisions under the specifically stated conditions.
These documents make certain that someone you trust will always have the power to act on your behalf—this can prevent the need for a court proceeding to secure this authority during a critical time.
Another item on your list of estate planning documents is the form used to select the beneficiary for your life insurance and retirement funds. Neither is controlled by your will, unless your estate is the beneficiary, which may not always the best option financially. That’s because naming your estate as the beneficiary of your retirement funds can result in additional income taxes being owed due to the short payout period when an estate receives those funds. No one wants their estate to pay extra taxes.
Everyone needs to have a will, but that is just a starting point. An experienced estate planning attorney will know what documents are needed in your state, so that you can ensure that you and your loved ones are properly prepared and protected.
Reference: The (Beckley WV) Register-Herald (October 15, 2017) “Important Medical and Financial Choices”