Estate planning is the process of anticipating and arranging for the disposal of a person’s estate. An estate plan attempts to eliminate uncertainties over the administration of a person’s property.
Estate planning involves the will, trusts, beneficiary designations, powers of appointment, property ownership, gifts and powers of attorney.
A will is a legal declaration by which a person, names one or more persons to manage his estate and provides for the transfer of property upon death.
A revocable trust is an arrangement whereby property (including real, tangible and intangible) is managed by one person (or persons, or organizations) for the benefit of another. The difference between a trust and a will, is that a will becomes effective only after you die and has been entered into probate. A living trust bypasses the costly and time-consuming process of probate, enabling your successor trustee to carry out your instructions as documented in your living trust at your death.
A power of attorney is an authorization to act on someone else’s behalf in a legal or business matter. Your power of attorney allows you to specify who acts for you when you cannot.
Living wills, also known as Advance health care directives, advance directives, or advance decisions, are instructions given by individuals specifying what actions should be taken for their health in the event that they are no longer able to make decisions due to illness or incapacity.
Many people confuse a living will with a durable medical power of attorney. A living will sets out directives concerning end of life decisions, whereas a durable power of attorney gives all medical decision making authority, to an appointed individual upon incapacity, including end of life decisions. People may also have a combination of both.
Digital Assets – Traditionally, the executor of a decedent’s estate and/or agent under a power of attorney manage the property of another person, subject to strict duties to act in the other person’s best interest. However, in 2015, the “Fiduciary Access to Digital Assets Act” was revised to allow your executor/agent to manage your “digital assets” as well as your tangible property, like your car. The act allows for management digital property like computer files, web domains, and virtual currency, but restricts a fiduciary’s access to electronic communications such as email, text messages, and social media accounts unless the original user consented in a will, trust, power of attorney, or other record.
If your will or trust or power of attorney was signed before 2015, there is a very good chance it does not give your executor, trustee or agent the right to handle your digital assets.
Pour Over Will – If you have a Living Trust-based estate plan, you will also need a pour-over will. The major function of a pour-over will is that it allows the executor to transfer any assets owned by the decedent into the decedent’s trust so that they are distributed according to its terms.
A Beneficiary Deed can be used to leave your home, or other real property directly to anyone you choose upon your death and thereby avoid having that property be subject to the probate process. This document can be revoked at any time prior to your death. In some circumstances it may be the simplest way to pass your most important and valuable asset on to your loved ones.