There is no cookie-cutter, one-size-fits-all estate plan, and this is why it is important to get personalized attention from a licensed attorney. Each case is different, and the exact way to proceed will depend upon the circumstances.
This being stated, there is a basic framework that applies to just about everyone, and we will look at it here.
Asset Transfer Vehicle
When you plan your estate, you have to record your wishes with regard to the way that you want your assets to be distributed after you are gone. The last will is the most common estate planning document, and it could suffice for someone with a very simple situation. This being stated, a trust of some kind will often be a better choice.
For example, if you have a loved one with a disability on your inheritance list, you should definitely take pause and consider your options. Most people with special needs rely on Medi-Cal as a source of health insurance, and many individuals with disabilities receive Supplemental Security Income.
These are need-based programs, so there are asset limits that govern eligibility. A large, lump sum direct inheritance could trigger a loss of these benefits until the resources were consumed.
To account for this, you could utilize a supplemental needs trust. The trustee that you name in the document would be able to use the assets in the trust to make the beneficiary more comfortable in many different ways. As long as the rules are followed, benefit eligibility would not be negatively impacted.
There are also irrevocable trusts that are used by high net worth individuals that are exposed to the federal estate tax. These would include grantor retained annuity trusts, generation-skipping trusts, and qualified personal residence trusts, just to name a few.
The device that is the right choice for the widest range of people is the revocable living trust. There are many different benefits to be realized through the creation of a trust of this kind as an alternative to a last will. We have covered them in previous blog post, and we will look into further details at a later date.
Advance Directives for Health Care
In addition to the planning for things that will take place after your passing, you should also address end-of-life matters. With a living will, you can state your preferences regarding the utilization of life-sustaining measures if you are in a terminal condition with no hope of recovery.
You can add a durable power of attorney for health care to name someone to make medical decisions on your behalf that are not covered in the living will. To allow your representative to access your health care records, you would include a HIPAA release form.
Your estate plan should also include the selection someone to handle your finances in the event of your incapacitation. As we touched upon in a previous section, there are a number of benefits to be gained through the utilization of a living trust. One of them is the ability to name a disability trustee to administer the trust if you ever become unable to make sound financial decisions on your own.
If you don’t have a trust, you could name an agent to manage your affairs if it ever becomes necessary via the execution of a durable power of attorney for property. We should point out the fact that the “durable” designation is relevant, because a power of attorney that is not durable would no longer be in effect upon the incapacitation of the grantor.
With a durable power of attorney, you would be giving decision-making authority to the agent right away. If this is a source of concern, you could use a springing durable power of attorney that would only go into effect if you do become incapacitated.
Even if you have a living trust, you could make the trustee the agent in a durable power of attorney so that he or she would have the ability to direct assets that were never conveyed into the trust.
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