What is Estate Planning?

We are all concerned with what happens if we become disabled or die. We can plan for the care of our loved ones and the distribution of our property NOW. It is within our power to minimize taxes payable as a result of death. Depending on our life circumstances, there are a variety of solutions: wills, trusts, joint ownership, durable power of attorney, and various combinations of these. In the possibility of disability of a spouse, benefits can be planned without depleting family resources.

Terms to Help You Understand Estate Planning

Will
A will is a legally binding statement of your choice of who will receive your property at death, and your choice of an Executor, who carries out your wishes as listed in the will. Joint property, trust property, and life insurance proceeds are not included in the distribution by Probate Court.

Probate
This is the term for the process in Probate Court in which the assets of the deceased are transferred to others. If there is no will, the state determines who the heirs are. Devisees are those who take the assets if there is a will. Besides the assignment of assets, Probate pays bills and distributes real and personal property. Real property is real estate. What the deceased owned outright is covered in Probate, not trust property, joint property, or life insurance proceeds.

Trust
Often used for tax planning, to provide for the management of assets by a qualified person, to provide for long-term care planning, and to avoid probate. A trust is a legal entity involving a trustee who holds legal title to property for the beneficiaries. There are two types of trusts: irrevocable, which cannot be changed, and revocable, which may be changed or rescinded by its author. Revocable trusts are usually termed "Living Trusts". The trustee must follow the rules laid out by the person who created the trust

Durable Power of Attorney
Should you become mentally incapacitated, you would want someone to act on your behalf. By planning now for that possibility, you would draw up a durable power of attorney. This is a document that authorizes a person (the attorney-in-fact) to act for another (the principal). The attorney-in-fact would try to make similar choices as you would if you were able. The term "durable" means that the document is only enforceable when you become incapacitated. Health Care Advanced Directives If your doctor should pronounce you incapable of making decisions regarding your own health care, you would need a document appointing someone to carry out your wishes. Your lawyer would assist you in the general guidelines for making decisions, and in particular, the right to all treatments under all circumstances, or the right to refuse or remove life support in the event of a coma or vegetative state. This is a durable power of attorney for health care. A Living Will differs in that it does not specify that someone other than the patient gets to make treatment decisions. It is a list of instructions for doctors or whoever is providing treatment for the patient.