Estate planning involves various tools which must be put together appropriately to get a good estate plan. Some of these tools include wills, trust, power of attorney, etc.
Wills
What is a will?
A will is a legal document which contains details how your estate should be distributed among your heirs or other beneficiaries at the event of death. Dying without a will can cause various problems for and among your heirs. Confusion might arise on how to handle certain things. Issues might arise within family members on whom to get what.
Some importance of having a will
- Having a will gives you the opportunity to decide those to inherit your estate when you are gone. You get to choose who to get what. It helps to keep your estate from does that you don’t wish to have a share in your inheritance.
- Will makes it easier for your heirs to get access to your estate as everything would have been put in place by you.
- Will also presents you with the opportunity of donating your estate to charity. This can’t be possible when you do not have a will as family members won’t know of your desire to donate your estate to charity.
- In your will you can specify whom to look after your children whereas, in the absence of a will, this decision will be made by the court.
Types of Will
There are various types of will a person can use. Some are common and highly recognized in court while others are not given much recognition in court.
- Testamentary will
This is a type of will which you prepare and sign in front of witnesses. It is a written will and the most familiar will.
- Holographic will
This is also a type of will written and signed by the testator. But unlike the testamentary will the testator signs without a witness. These types of wills are used in emergency situations when there are no witnesses on ground.
- Oral will
This is a very poor type of will and it is the least recognized in court. In this type of will, the testator verbalizes his wishes in the presence of witnesses and this does not involve writing or documentation of any form.
- Mutual will
This type of will exist between married couples who are committed to each other. This will ensures that at the death of a spouse their estate goes to their children.
Trust
A trust is fiduciary relationship which is established in order to safe guard one’s assets. It involves giving ownership rights of your assets to another person for the benefit of a third party. A trust ensures that your assets are shared exactly how you want them shared. It ensures that there are no delays; it helps to avoid much paper work and also prevent your assets from going through the probate process. Some type of trust helps to avoid or reduce taxes on your assets.
- Revocable and irrevocable trust
A revocable trust is the type of trust which can be terminated by the trustor while he is alive. For an irrevocable trust, it cannot be changed or altered once it has been established
- Testamentary trust
This kind of trust states how a trustor’s asset is distributed after his death. It is also known as a will trust. A testamentary trust is an irrevocable trust.
- Living trust
In this kind of trust, the person’s assets are made available for his use while he is alive and at he’s death, these assets are transferred to his beneficiaries. It can either be revocable or irrevocable.
Power of attorney
Designating a power of attorney is a very important aspect of estate planning as it makes provision for incapacitation.
- Health care proxy: Here you name someone who will be in charge of your medical care in case you become incapacitated. This person has the power to determine the kind of medical treatment you will be given, the extent to which this treatment will be administered and he is responsible for your general wellbeing. His role becomes active when you become incapacitated.
- Financial power of attorney: Unlike the health care proxy, the financial power of attorney is in charge of making financial decisions on your behalf in times of incapacitation.
In making an estate plan, you should put into consideration the most relevant tools that should be included in planning your estate. If you are in need of an attorney to consult or hire to assist you through the process, our attorneys are always available to talk to you.
