Wills & Other Estate Planning Tools

Designing your estate plan is similar to a builder using tools to construct your home. When used for the right purpose and in the right way, each estate planning "tool" is very effective. The following is a sampling of some of the tools we use when preparing your estate plan.

Wills

Formally known as a "last will and testament," many believe a will is the only estate planning they need. Unfortunately, it is rarely sufficient by itself. A will does not avoid probate or have any effect while you are still living. It simply directs the probate court as to how you would like your assets distributed after you are gone. Wills serve a function, however, as they are important for naming your minor children's potential guardian. Wills are also useful if you are a single person without real property, with few assets, and are in good health. If this describes you, it might make sense to start with a will and then "upgrade" to a trust down the road.

Trusts

Trusts form the base of the estate planning foundation and are usually preferable to wills for a number of reasons. Unlike a will, assets placed into a trust avoid probate and are privately and quickly settled upon your death. Also unlike a will, a trust is a living estate plan that becomes effective immediately and can be useful to your family and others while you are still alive! Trusts can be used to direct assets, such as funds for college or a family business, and ensure they are used for their purpose by others. Trusts are also an effective strategy when used to plan for disability or appoint a guardian should you need one while you are still living.

Although a revocable living trust is used for most situations, bear in mind there are literally dozens of types of trusts, all serving different functions. A few of the more common ones include special needs trusts, irrevocable life insurance trusts, NFA gun trusts, spendthrift trusts, and various types of asset protection trusts that respond to disability, creditors, and divorces. One trust, or a combination of trusts, may be suitable for a comprehensive estate plan, depending on your needs and goals. Each situation is different, and no two trusts will be exactly alike.

Powers of Attorney

Powers of attorney are similar to a set of spare keys; you should not give them out unless it is to someone responsible. These documents enable those that you designate to make decisions for you on a range of issues such as financial or medical matters. While used as a safeguard for if you are unable to make these decisions on your own, powers of attorney also function when you are healthy by allowing trusted individuals to make decisions when you must be absent.

Healthcare Directives

Also known as "living wills," healthcare directives are documents used to express your desires should you become ill or incapacitated and you are not expected to recover. They empower those you have designated to make end of life decisions on your behalf. You should discuss your choices before the fact with your family, especially any decision makers, so there are no surprises later on should the healthcare directive ever be needed.

Beneficiary Deeds

Beneficiary deeds are sometimes used when avoiding probate is the only concern with regard to a piece of real estate. It allows property to pass on to who you choose promptly after your death. But beneficiary deeds have several disadvantages compared to trusts. Among other things, they do not account for potential incapacity, they fail to deal with unusual situations including minor or irresponsible beneficiaries taking property without direction, and they forego several planning options, such as potential creditor and divorce protections. Nonetheless, they serve a purpose under the right circumstances for some individuals.