Wills, Trusts, Living Wills, and Powers of Attorney
A legal document that specifies what should be done with your assets after you pass away. Without a will, the laws of the state in which you live dictate how your property is to be divided after your death. This document may be as simple or as complex as you desire, and should include a guardianship provision and a trust for children under 18.
A provision in a will that allows you to appoint a trustee to hold funds for a named individual, until that individual reaches a certain birthday or until some other described event occurs. Although a trust is required for children under 18, it can also be used for a wide variety of purposes.
A document that allows you to appoint a named trustee to hold your assets while you are still living. You may name yourself the trustee in a revocable trust, which is a trust that can be changed by you at any time. For non-revocable or irrevocable trusts, which are trusts that cannot be changed by you, you must name someone other than yourself to act as trustee.
The benefits of a revocable trust are the tax advantages to estates over $600,000 and the avoidance of public disclosure of estate assets, which is otherwise unavoidable in probate. Although you still control your own assets as trustee of a revocable trust, there may be additional paperwork necessary to manage the trust.
The main purpose of an non-revocable or irrevocable trust is to avoid having excessive personal assets for purposes of medicaid claims. Such a trust must be established at least 2-1⁄2 years before you apply for medicaid. The disadvantage to this type of trust is the loss of control of your own assets.
ADVANCE DIRECTIVE (LIVING WILL)
A legal document that prescribes what type of medical treatment you wish to receive, in the event you are disabled to the point where you can no longer communicate your own desires to your doctors. An advance directive is particularly advantageous in situations where, because of serious accident or sudden illness, your life is being extended artificially against your wishes, which can also drain your family's assets.
HEALTH CARE POWER OF ATTORNEY
A legal document, also known as a "Health Care Proxy", that allows you to appoint another individual to make critical health care decisions for you, in the event you become incapacitated. This type of document may work in conjunction with an advanced directive. Such a power of attorney may avoid the necessity for a court to appoint a guardian to make health care decisions for you upon your incapacity, which could cost you or your family thousands of dollars.
DURABLE POWER OF ATTORNEY
A legal document that allows you to appoint another individual to make financial decisions for you, either after you become incapacitated, or at any time you designate. This power may easily be revoked at any time. Yet, without a properly drafted durable power of attorney, a court may appoint a conservator, who is charged with making important decisions for you, and such a court proceeding could cost thousands of dollars.