If you are new to estate planning, you might think the only option you have for outlining how you would like your assets handled after you pass on is a will. And while wills are excellent tools for dictating how to divide a home, money, property, and pets amongst family members and other associates, they do have certain limitations. There are other legal provisions you can put in place that not only serve to strengthen your will, but also protect you and your estate while you are still living.
According to Tennessee attorney Mark Pierce, a will can be used to “name an executor to your estate, instruct on payments of debts and taxes, provide for pets, or serve as a backup to a living trust.” They’re simple to put together, and often incorporate boilerplate language. But what if you want a document that can offer even more protections for you, your heirs, and loved ones, or need to address very specific concerns about medical care or financial planning? That’s where tools like living trusts (also known as revocable trusts) and durable power of attorney come in handy.
Unlike a will, an estate that is administered through a trust doesn’t have to go through a process called probate. Probate, essentially, is a court system that verifies the value of items named in the will at the time of a person’s death. It can take time for the court to analyze the estate, physically remove and catalogue items from the home, and distribute the assets according to the will. It’s also public record how probate ultimately handles the estate. But by setting up a trust, you not only strengthen your will, you can avoid probate. That can definitely streamline the process of sorting out who gets what from the estate.
In addition to arranging for a successor trustee to manage your living trust, you might also want to look into arranging for someone to serve as your power of attorney. As Pierce explains, “You may choose anyone—a friend, a relative, a medical professional—and you may choose which powers you grant them, and you may choose more than one power of attorney.”
That level of specificity means you need to put some thought into what you would want the other party to be able to do for you if you were incapacitated. Signing documents, making deposits and withdrawals from your bank account, managing your retirement fund, handling your insurance policies, and renting out pieces of property are all examples of powers your proxy could be granted. Sitting down with both the person you want to name power of attorney and a lawyer familiar with estate law can help you create a list of powers that suit your needs and that your proxy is comfortable with. Your attorney can help you make sure you don’t forget a power that might come in handy, but isn’t the first thing to leap to mind.
By combining a living trust, a will, and power of attorney, you can protect your estate with a strong package of legal documents that make it absolutely clear who does what in the event of your illness or passing. Knowing you have those measures in place means your family won’t be plunged into a confusing sea of last-minute choices in an already wrenching situation, such as after an accident or terminal diagnosis. With your legal documents filed, you can get back to enjoying time with the grandkids, going to your favorite classes at your senior living community, and savoring your health. It feels good knowing you have everything handled, not just for your estate, but all the years to come.