Ins & Outs of a Will, Living Will & Trust
Estate planning is an important legal tool often put on the back burner because people are very busy with their day-to-day activities. Before putting off estate planning any further, it is important to consider the various estate planning options available - particularly three heavily used estate planning tools: (1) wills, (2) living wills, and (3) living trusts. As laws vary by state, it is always important to seek legal advice from local family attorney experienced in estate planning in your jurisdiction.
A will (or "last will and testament") is a written legal document that is filed with the court and explains how you would like any assets remaining in your estate to be distributed upon your death. The requirements for drafting a valid will are based on state-specific law. However, the following is a non-exhaustive list of common legal requirements when drafting a will:
- The person must be the age of majority (usually 18 or older).
- The person must be of "sound mind," or have the mental capability to make knowing and voluntary decisions regarding the disposition of his or her property.
- The person must sign and date the will in front of two witnesses who hold no interest in the will.
The process by which a will is effectuated upon your death is called probate. In essence, the probate process confirms the validity of the will. This process differs depending on your jurisdiction, so it is important to assure compliance with the probate process in your jurisdiction.
A living will, not to be confused with a will, is a health care directive. This document provides instructions for your medical care in the event you are incapacitated and unable to communicate your medical care decisions.
Because a living will expressly determines medical care in the event of incapacitation, drafting a proper living will eliminates disagreement and uncertainty among family and other loved ones in otherwise difficult and stressful times. Requirements of a living will are based on your local state law. The following is a non-exhaustive list of procedures that may be included in a living will:
- Whether a breathing machine should be used.
- Whether resuscitation efforts should be taken.
- Whether a feeding tube is authorized to sustain life.
- Whether you want to donate organs in the event of death.
Another consideration when preparing a living will is to designate someone as your durable power of attorney for health care. Your designated power of attorney cannot change the directions in your living will, but he or she can make health care decisions not expressly covered in your living will. This assures that you have someone you trust making any decision arising out of circumstances not otherwise covered in your living will.
Once the living will is drafted, always provide a copy to your physician, any designated durable power of attorney, and family members. Lastly, it is important to occasionally review your living will, as circumstances may change regarding your decisions for medical treatment.
A living trust is a private agreement in which one person (a "trustee") holds property for another (the "grantor") for the benefit of at least one third party (the "beneficiary"). The agreement creates a separate legal entity, the trust, which holds and owns your property and assets during your lifetime.
The grantor provides instructions to the trustee who manages the assets within the trust for the benefit of the beneficiaries. A grantor can also be the trustee, however; when the same person acts as both grantor and trustee, the grantor should have a successor trustee established in the event the grantor dies or is incapacitated and can no longer function as the trustee.
Distributions of a living trust may be structured in a number of ways:
- The living trust could be created to distribute assets on a staggered basis (such as making distribution from the trust to the beneficiaries on their twentieth birthday, twenty-fifth birthday, and thirtieth birthday).
- The living trust also could be a pure discretionary trust, providing the trustee complete control of the trust distributions to the beneficiaries.
- The living trust could be a support trust, requiring the trustee to make distributions based on the health, education, support, or maintenance of the beneficiaries.
A living trust may be revoked or amended at any point in the grantor's life. Depending on how the trust is established, when the grantor dies, the trust may either continue in nature, or it may terminate. If the trust terminates, the trust provides instructions for final distribution of the assets.
And lastly, a living trust can keep your estate planning private. Unlike the distribution of a will that is supervised by the court, a trust is a private agreement and need not be filed with any court.
Some of these benefits offered by a trust may, however, be muted depending upon your situation. For example, some states do not require probate for estates that are of very low value. As a general matter, the creation of a trust, because it is a more complex legal document, requires a greater up-front investment.
Contact a McKinley Irvin family attorney to learn more about whether a living trust might benefit you, or read more about estate planning.
- Estate Planning