Estate Planning: Wills, Trusts, Living Wills and Living Trusts
Nobody likes to think about what happens when we die, especially when still relatively young and healthy. But careful estate planning can save you and your loved ones from all sorts of difficulties. With the right combination of wills and trusts, you can avoid expensive or protracted delays in probate court, ensure that your end-of-life healthcare preferences are followed, and guarantee that your property and assets end up where you want them.
Some key attributes and advantages of each type of will or trust:
- Wills allow you to name beneficiaries for property, name guardians for young children or wards, name managers for children’s property, instruct how taxes and debt should be paid, name an executor for your will, and specify what should happen with your remains.
- Living wills allow you to make important healthcare decisions in advance, like whether and how long to remain on artificial life-support and whether to become an organ donor. Additionally, you can create a healthcare power of attorney, specifying who should make medical decisions for you if you can no longer do so yourself.
- Trusts, or irrevocable trusts, have distinct advantages for avoiding estate taxes and for asset protection. For example, Medicaid will not count assets held in irrevocable trusts when they determine whether you qualify for Medicaid-assisted nursing home care. The disadvantage to irrevocable trusts is that you cannot modify them once you sign the agreement.
- Living trusts allow you designate beneficiaries in a way that gives them faster access to funds by staying out of probate court. You may modify living trusts at any time after creation. Additionally, because trusts do not require probate, they allow you to retain privacy after death, whereas anyone can read a will, which must go through probate and becomes part of the public record.
Death and taxes are both inevitable, or so the saying goes. While there is nothing we can do to avoid death, we can help ease the tax situation and other burdens that affect families in the wake of a loss. By working out the details of your estate plan today, you are protecting those you love tomorrow.