Estate planning is the process by which an individual or family arranges the transfer of assets in anticipation of death. An estate plan provides an individual the flexibility to preserve the maximum amount of wealth possible for their intended beneficiaries prior to death. Further, a well drafted estate plan directs how one’s affairs should be handled should an individual pass away or become incapacitated due to illness or injury (an estate plan involves much more than just having a will, as explained below).
An estate is the total property, real and personal, owned by an individual prior to distribution through a trust or will. Real property includes real estate and personal property includes everything else, for example cars, household items, and bank accounts. Estate planning distributes the real and personal property to an individual's heirs.
Common Instruments Utilized in Estate Planning:
1. Last Will and Testament (also referred to as a “Will”) – a legal document that communicates a person’s final wishes pertaining to their assets and dependents. The last will and testament outlines what to do with the decedent’s (deceased person’s) possessions, to whom (e.g., a person, group, or charity) the decedent will leave his or her possessions and directs what is to happen to other things they are responsible for (e.g., custody of dependents, management of accounts, and financial interest).
2. Trust – a method of estate transfer creating a fiduciary relationship in which a person gives another party authority to handle assets for the benefit of beneficiaries. There are several types of trusts, such as a revocable/living trust (a trust that allows for the terms to be changed at any time) and an irrevocable trust (a trust that cannot be modified after creation without the consent of the beneficiaries). The type of trust you build will all depend on the desired outcome for your assets and the beneficiaries of your assets.
3. Power of Attorney – a legal agreement delegating authority from one person to another and granting the right to act on the maker’s behalf as that person’s agent.
4. Living Will – allows a person to create a healthcare directive that acts as a guide to medical staff on the person’s preferred treatment options—for example, whether to prolong their life or cease artificial respiratory or feeding.
5. Designation of Health Care Surrogate – a written document designating another person to make healthcare decisions for an individual or receive health information on behalf of an individual.
If you have questions or concerns regarding estate planning services, contact the Bostick Law Group, PLLC today to schedule your case review!