It’s never too early to start gathering an estate plan. Even young adults that do not have many assets should begin working with an estate lawyer to begin the process of drafting an estate plan, especially if they have children. Many people think that death is so far off that they don’t plan. However, anything could happen – an accident that leaves you unable to manage your affairs or causes death, or a sudden illness that leaves you incapable of managing your affairs. If you do become incapacitated without asset protection, creditors may take your assets, leaving you with nothing to support yourself or to leave to your children.
Documents in Your Estate Plan
An estate plan is more than a will. You should have a will, some type of trust, a power of attorney for medical issues and to manage your estate and a living will.
Will
A will dictates how your assets will be distributed upon your death. Instead of listing everything in your will, it could refer to a trust.
Living Will
A living will makes your end of life wishes known to your loved ones and medical personnel. It tells doctors when to resuscitate you and when to let you die. Some people may not want to live with the constant problems of heart issues, cancer or other issues that could cause death. You may outline certain things in a living will, such as resuscitation if you have only one problem that may be repaired, or non-resuscitation if you have multiple problems such as heart and kidney issues combined with cancer.
Power of Attorney
When you give someone power of attorney, you give that person permission to make decisions for you, in the event that you cannot make those decisions yourself. A power of attorney may be as limited or as broad as you want it to be. For example, you may give someone a medical power of attorney, in which case, that person may only make medical decisions for you if you cannot do it yourself. A durable power of attorney may give a person the ability to make many decisions, including but not limited to buying and selling real estate, filing bankruptcy and managing your bank accounts should you become incapacitated.
Trusts
Trusts are a bit more complicated in that there are several types and each type is created for its own situation. A wills, trusts and estates attorney such as those at France Law Firm will discuss your wishes and will help you choose the trust that best meets your needs. This is based on your age, illnesses you may have, whether you have children and/or a spouse, if you have a disabled child, the amount of property you own, including real estate, bank accounts and other assets, and how you want your assets handled should you die or become incapacitated. A trust may be formed by a will, in which case it would be formed after death.
Types of trusts include:
- Revocable trust: Created during your lifetime. May be changed, altered or revoked. Also known as a living trust.
- Irrevocable trust: Cannot be changed, modified, altered or revoked once created. Once property is placed in the trust, it can never be removed.
- Asset protection trust: Protects assets from future creditor claims. This type of trust is usually set up in a different country. May be irrevocable for a set number of years.
- Constructive trust: This type of trust is implied. It is established by the court based on certain circumstances.
- Special needs trust: This trust is set up for a child with special needs who is getting government benefits. The trust is allowed by Social Security and allows the child to receive an inheritance or gift without disrupting the government benefits.
- Spendthrift trust: This trust is set up so that the beneficiary cannot sell or pledge his or her interests in the trust.
- Tax by-pass trust: The tax by-pass trust allows a spouse to leave money to the other and limits the amount of federal estate tax that is payable on the beneficiary spouse’s death. This is helpful if the estate is worth more than the deduction that triggers the federal estate tax.
- Totten trust: This trust is created by depositing money in an account held by a financial institution during the lifetime of the beneficiary. The Totten trust is a revocable trust since the gift is not available to the beneficiary until the grantor’s death. This trust avoids probate.
- Charitable trust: This trust leaves assets to a charity or to the public.
Contact France Law Firm
Contact our office for a consultation with one of the wills, trusts and estates attorneys at France Law Firm to create the best estate for your situation, regardless of your age. Remember, it’s never too soon to set up an estate plan.
