When you are drafting an estate plan, the common question arises as to whether to include a plan for your loss of capacity. Some people also have other factors to consider in estate planning such as the inability to physically or financially care for oneself. Finally, you will also want to plan for the distribution of your assets upon your death.
Documents You Will Need
Many documents are required for this purpose. You will need two primary documents granting authority while you are still alive, the durable power of attorney for property and the durable power of attorney for health care. The durable power of attorney or financial power of attorney is the primary document for handling your finances when you are no longer able to do so. A person or an agent is designated who will be responsible for controlling the finances on your behalf if and when you become incapacitated.
You also need to have a current trust (created by a trust instrument) or will, either of which will have an individual given authority to deal with your property at your death. A trust uses a trustee for this purpose while a will uses an executor or personal representative.
The other tools used in planning for this stage of life are the advanced health care directive, or living will, and the durable power of attorney for health care. The advance directive allows you to make certain choices in advance for the types of end-of-life health care you wish to receive. It takes away the decision-making burden from your family and the decision-making authority from medical professionals.
In contrast, the health care power of attorney authorises another to make health care decisions on your behalf. The health care POA allows the person referred to as your health care agent the power to make medical decisions that are not covered in your advanced health care directive when you are no longer capable of doing so. Seeking advice from one of the experienced Philadelphia Estate Planning Lawyers can prove to be valuable.
The living will, or advanced health care directive, indicates what medical steps must be taken in the case when you are no longer able to decide for yourself. In most states, an advanced health care directive will allow you to make certain decisions in advance which will be binding upon your family and medical professionals. Among the choices you can make are:
Some people select a DNR or Do Not Resuscitate order. A DNR is a request made by a person whose heart stops functioning or he or she stops breathing that the health care personnel must not perform any CPR (cardiopulmonary resuscitation).
A medical health care power of attorney is useful for when you can no longer make decisions, but there are still medical decisions about your on-going care to be made. In other words, it covers those times when you are incapacitated but not on the verge of death.
A durable power of attorney for property bridges the gap between when you are capable of making financial decisions and when your executor will make them. It appoints an agent who will, during the period of your incapacity, legally act as you for all financial purposes.
It allows for bills to be paid, groceries to be bought, and life to go on for your loved ones. It only becomes effective when you are incapacitated and will cease to be effective if and when you regain capacity.
A person must still be in control over complicated matters while planning for the future and considering living wills, powers of attorney, and other estate planning tools that can offer peace of mind in difficult times. RConsult with a qualified estate attorney in Philadelphia to get more information on estate planning and estate administration.
A trust is a legal arrangement set up in a trust instrument which transfers ownership of a property from the settlor or trustor to a trustee (the legal but not beneficial owner) and arranges for distribution of that property under the circumstances defined in the trust.
The trustee can be either an institution or a person or, under the right circumstances, even the individual creating the trust. It is advisable, however, to appoint at least one successor trustee in case the initial appointee cannot or will not serve.
The trustee, like an executor of a will, distributes the trust property when the triggering event occurs (usually the trustor’s death) in accordance with the terms of the trust.
A trustee may have long-term on-going responsibilities where there are, for example, minor children who will be supported by trust assets. A trust, unlike a will, is not a public document and does not go through the probate process.
A skilled and knowledgeable Philadelphia estate lawyer can help you understand the different types of trusts and their purposes. Fundamentally, there are two primary types of estate planning trusts: testamentary trusts and living trusts. Trusts can also be either revocable or irrevocable.
When you use a trust, unless there is a will included in the trust, you avoid probate entirely because the property in the trust at the death of the trustor is not part of the estate of the person who died. Therefore, a trust, whether revocable or irrevocable, will not be subject to probate.
In a revocable trust, a settler is permitted to retain the control over the assets transferred to the trus0. The trust is revocable because the settlor or trustor retains the power to change, revoke, and add to the trust at any time. In testamentary trusts, the property is transferred to a trust that depends on the death of the settlor for the distribution of the trust property as mandated in the will included in the trust instrument. A testamentary trust includes a will.
Use of will in estate planning
A will is a document through which an individual sets out the distribution of that party’s estate at death. The will appoints an executor or personal representative and includes very detailed distribution instructions. A will is generally created when a person is alive and takes effect when the person whose will it is (the testator) dies.
After the testator dies, the will is submitted to the probate court for processing. Probate is a process in which a court will determine the validity of the will and the complete will is reviewed. The court will determine whether the testator followed all the required formalities and will receive any challenges to the will by potential heirs.
When the court completes this process, the assets are distributed to the beneficiaries. Payments of debts and similar matters must be addressed prior to the distribution of assets to the heirs.
It is a good idea to seek help from an estate planning attorney who has the expertise in dealing with these issues to help you decide whether a will or trust is best for your situation.
Estate planning refers to work done under all the laws that govern the ownership and distribution of assets from one individual to another after the owner’s death. A Philadelphia estate attorney can be a powerful ally if you are in need of guidance when it comes to such matters, including wills, trusts, probate, and more.
If you are looking for legal assistance with your estate planning, contact ACKF, PLLC a firm that concentrates a significant portion of its practice in estate planning.
Legal professionals can help guide you through a variety of estate planning options, including trusts, wills, and powers of attorney.