What is Estate Planning?
If you have recently bought a house, inherited money, divorced, married, growing a family, then creating or updating your estate plan should be your goal. The best estate plan enables you to reduce estate taxes, minimize estate expenses, choose power of attorney (agents) and estate administrators and trustees, provide for immediate family, allow for efficient distribution of property, plan for incapacity, and so much more!
Last Will and Testament
A Last Will and Testament, most commonly referred to simply as a “ Will ,” is a legal document in which an individual records their wishes as to how their possessions and affairs should be handled after death. The individual making the Will may specify, for example, who should take custody of children, and which heirs should be given certain specified assets. Appointing executors and trustees. A last will and testament should state who will be appointed the executor of your estate. The executor otherwise known as a Personal Representative, is the person who will carry out your wishes as spelled out in your last will and testament. Your Last Will and Testament can also provide the name of the individual you would like to serve as trustee of any testamentary trusts created by your last will.
Provide who inherits what. The most common purpose for a last will and testament is to provide the names of the individuals or organizations that will receive assets from your estate.
Appoint guardians for your minor children. Typically, a last will is a testamentary document that provides who you would like to have custody of your children in the event of your untimely death. Your last will should also provide at least one successor guardian in the event that your first choice is either unwilling or unable to serve.
Establish a testamentary trust. Often, you may want to control the distributions from your estate so that a minor child or loved one does not receive all of the property that they are inheriting at once. In this situation, a testamentary trust created by your last will is designed to hold property from your estate for the benefit of one of your heirs.
Provide for final arrangements. Although this is also done in other documents too, a will commonly states whether an individual wants to be buried or cremated, and where the body should be buried or the ashes should be spread. Sometimes, a will contains other information about funeral wishes too like where it should take place and even what readings might be recited.
A trust is an agreement that is used to achieve estate planning goals. Some of the goals for a trust could be avoiding probate, planning for disability, protecting assets, minimizing estate taxes, quick and efficient distribution of assets.
The parties to a trust agreement are the, trustor or grantor, the trustee or successor trustee, the beneficiary or beneficiaries, and the trust protector (if one is appointed). A benefit of a revocable trust is you can serve as your own trustee. Likewise, you can designate who the beneficiaries are in the trust document. A type of revocable trust is a “self settled” trust, which allows you to set up an irrevocable trust naming yourself as beneficiary. A trust protector assures that if changes need to be made to the trust document itself, and you aren’t allowed to make them, the trust protector could do so at your direction. The trustee, is responsible for overseeing and distributing assets in the trust and should be someone who is familiar with financial management and the complex trust administration process. your trustee is the individual or individuals that you appoint to administer the terms of your trust.
The revocable trust, aka living trust, can be revoked after it has been created. The revocable living trust can be easily amended to make changes, such as to the trust beneficiaries or changing the trustee and successor trustee, simply by amending the existing living trust. Trust assets may be transferred in and out of the revocable trust.
An irrevocable trust is the type of trust agreement that CANNOT be revoked after it has been created. The irrevocable trust is an entirely different animal from the revocable trust for these reasons, cannot be terminated after they are established and this means that transfers of trust assets are restricted, cannot be easily amended (changed) or revoked due to their restrictive nature, although some safeguards may be implemented to add some flexibility.
Both types of trusts can be very useful for a variety of estate planning strategies and goals.
What Is a Living Will?
A Living Will is a statement about your desired medical decisions if you are unable to make a decision due to incapacity. Living Wills are also called “advanced directives.” The Living Will, unlike a Last Will and Testament, is effective while the individual is still alive. In a Living Will, the individual provides for the type of medical care that they want or do not want.
An example of a provision included in a Living Will is “Do Not Resuscitate.” In instances where the individual is incapable of making a medical decision, if there is a question of whether to resuscitate them, the medical provider would follow the instruction in the Living Will. Many people will include decisions about life support or maintenance in their Living Will.
It is a common misconception that a Living Will is the document that devises your property after you pass away. That document is called your Last Will and Testament. However, a Living Will is a separate legal document from your “Will” and is only about your wishes for medical care. The Living Will is an essential component of an estate plan.
The District of Columbia has specific requirements for the language and execution of Advanced Health Directives, such as a Living Will. While there may be some forms online, it is important to check that your documents meet the legal requirements under DC law.
To ensure that your decisions related to medical care are carried out according to your wishes, contact us to help you draft and execute your Living Will.
Why Should You Have a Living Will?
Many people just want to know that their medical decisions will be carried out according to their wishes. A Living Will is only used in the event that you are unable to make your own health care decisions. As long as you are able to communicate your wishes with the medical provider, the Living Will is not used.
It is important to have an attorney help you draft the appropriate language so that you ensure your wishes are carried out. During these uncertain times, it is essential to have a legal document outlining your wishes.