Your Will is important and your state government has provided a free skeleton Statutory Will that you should study and use if it fits your purpose.  You should take advantage of this opportunity put your last wishes in writing.  With the right advice, your Will becomes an essential part of your individualized estate plan.  To help you start thinking about why you need a will, visit my Estate Planning FAQs.

DO I NEED A DURABLE POWER OF ATTORNEY FOR HEALTH CARE?

Your Durable Power of Attorney for Health Care gives authority to act when you are unable to communicate your health care decisions.  For your convenience, your state government provides a free skeleton Health Care Power form that you should study and use.  Having one in place allows your medical care providers to focus their attention on your medical care.  In California, this document is called your Advance Health Care Directive.  In other states, it may be referred to a a Health Care Proxy. The persons you name are granted  important powers such as the authority to select or discharge health care providers and institutions; the power to accept or refuse medical treatments, including artificial nutrition and hydration and resuscitation attempts; the power to receive information on your condition, view your medical record, and authorize release of your medical record when needed; and the power to consent to tissue and organ donation, authorize an autopsy, and arrange for disposition of your body after death.   To help you start thinking about why you need a a health care proxy or advance directive, visit my Estate Planning FAQs.

DO I NEED A DURABLE POWER OF ATTORNEY FOR FINANCIAL MATTERS AND PERSONAL CARE?  

When you are incapacitated, it is vital to your peace of mind and well-being to have the right persons manage your finances and arrange for your personal care.  Your state government provides provides a form for you to appoint an agent to act for you.  This form allows you to select from a list of actions and transactions in which your designated agent may act on your behalf as if you were present.

• Real Property transactions
• Tangible personal property transactions
• Stock and bond transactions
• Commodity and option transactions
• Banking and other financial institution transactions
• Business operating transactions
• Insurance and annuity transactions
• Estate, trust, and other beneficiary transactions
• Claims and litigation
• Personal and family maintenance
• Benefits from social security, medicare, medicaid, or other governmental programs, or civil or military service
• Retirement plan transactions
• Tax matters
• Personal Care

To help you think about why you need a Durable Power of Attorney for Financial Matters and Personal Care please visit my Estate Planning FAQs.

DO I NEED A TRUST?  

FIRST THINGS FIRST:  Before you decide on whether or not a trust is for you, you must make sure that your most important documents are in place and ready to protect you and your family if you become incapacitated, even for a short time.  These documents are your Health Care Power of Attorney and your Durable Power of Attorney.  They operate while you are living and provide the peace of mind your family needs at critical times.   Your state government is interested in your welfare and has provided skeleton forms for this purpose. Study them and know what they mean.  You may have to have an attorney explain the forms and modify them for you, but you will have documents that work for you.

CREATING A TRUST:   There are two ways to create a trust.  You can create a trust in your will to take effect when you die.  You can also create a living trust that operates during your lifetime and continues to operate when you die.  In deciding how your assets should be managed after your death or during any time in which you are incapacitated, you should consider how a trust can serve your purposes.

To answer preliminary questions about why you should consider creating a trust, please visit my Estate Planning FAQs.

Here are some of the reasons for choosing a trust as the vehicle to attain your objectives.

1 You want to make a gift in your will, but  you want the gift to be managed by someone other than the person receiving the gift.  You do this by creating a trust in your will.  Example:  In your will, you could say:  I give $$$ in trust to my daughter to pay for my granddaughter’s education.

2. You are wealthy and wish to take advantage of certain tax laws that go into effect when you die.

3. You are a married person with a blended family and you want  to create separate trusts for your children of a prior marriage.

4. You want to avoid making public your financial affairs if you become incapacitated.

5. You want to avoid making public your financial affairs in probate court.

6.  You want to create a fund for the benefit of your minor children, a special needs child or your adult children. These trusts may contain complex provisions for distribution of your assets long after you have died.

7. You want to create a trust for your pet.

8.  You want to create a trust in conjunction with a charity or your alma mater.

Here are some other considerations to help you decide what kind of trust is for you.

MULTIPLE TRUSTS

• You may have one or many trusts. Each one may be simple or highly complex, depending on what you want it to do. Some trusts are revocable, which means that they can be changed or revoked at any time by the person or persons who created them. Some trusts are irrevocable and cannot be revoked. Some trusts are living trusts, which means that they are in effect during the lifetime of the creator who is also the lifetime beneficiary entitled to the trust benefits. Trusts avoid probate court proceedings because the property in a trust is used and disposed of according to the terms of the trust rather than under the supervision of the probate court. A court can come to the aid of a person with an interest in a trust, but this is not the same proceeding as the probate of a will.

USE OF PROBATE PROCEEDINGS

• If you live in a state that allows unsupervised probate proceedings and if your estate assets will be immediately distributed without estate tax consequences, a living trust may be unnecessary, especially if you have no patience with something you consider time-consuming or cumbersome. Your heirs will still have to tolerate some delay and public scrutiny with the probate procedures.

INVESTIGATING TRUST OPTIONS

• If you have sufficient assets to be subject to estate tax, you must consider all your trust options. This is no small task. Revocable marital life estate trusts, irrevocable life insurance trusts, and revocable bypass trusts are not household terms. Your tax advisor and your insurance planner are essential in making the right choices. You may be surprised at what the government will include in your taxable estate if you have not created the right trusts.

REVOCABLE LIVING TRUSTS

• Even if you do not have a wealth of assets, you should consider creating a revocable living trust in which you are the lifetime beneficiary and control all the assets. Upon your death or disability, the successor you name would carry out your wishes as expressed in the trust. This trust would be in effect during your lifetime and could be changed or revoked by you while you are not incapacitated. Trust assets can be added or removed as you see fit and you can include provisions to protect your assets and provide for yourself, your spouse and your children during your lifetime and after your death.

IRREVOCABLE TRUSTS

• Certain trusts, such as life insurance trusts, are created for tax reasons and are irrevocable, which means that they cannot be revoked by the person who created them. These trusts must be considered in any estate plan that includes life insurance.

OTHER REASONS FOR CREATING TRUSTS

• Many trusts are created for reasons other than the avoidance of tax consequences:

1. You may wish to spare your family the time and expense of guardianship and probate court supervision which make public your financial affairs during your incapacity of after your death.

2. You may wish to create an irrevocable life insurance trust to coordinate with your family trust.

3. You may wish to provide for care and disposition of valuable property outside a will, especially when the nature and value of the property changes often. For example: An antique collector, who may or may not have a will, decides to make a list of cherished items and to name a family member or a friend to distribute these items to specific persons on certain conditions. This list can be changed at any time, with items added or removed, as desired. As long as the list is properly drawn and maintained, it can serve as a trust for the antiques and any other personal property added to the list.

4.  You may be a business person who wishes to protect the family finances while you are disabled. This trust would contain provisions identical to those in your general durable power of attorney and would also include broad health care powers that take effect immediately.

6. You may wish to provide your family with a flexible and complete solution to problems arising from your death or disability.

These examples show the variety of trusts available to carry out your best intentions. One or more of them can fit nicely into an estate plan that includes a special pour-over will, a health care proxy and a general durable power of attorney.

FAQ – Wills, Trusts, Powers-of-attorney