Five Essential Documents Part 2
I listed the Five Essential Documents in the last post and also described Revocable Living Trusts. To quickly review the essential documents are
- Revocable Living Trust
- Pour Over Will – The Last Will & Testament. By design, it acts as a safety net to “catch” any assets not owned by the Living Trust
- General Durable Power of Attorney – An instrument authorizing another to act as one’s agent or attorney for financial decisions. Thie instruoment becomes or remains effective in the event of disability.
- General Durable Power of Attorney for Healthcare – An instrument authorizing another to act as one’s agent or attorney for healthcare matters.
- Living Will – An instrument that states your wishes to withold medical treatment in the event your medical condition is terminal with no hope of recovery.
To quickly recap this past Sunday’s show where we finished off the list of essential documents.
- If you do go with a revocable living trust, it’s best to get the funding done at the time of signing instead of later on.
- Atty Russ Cook pointed out that Time Shares are an extremely difficult asset because they’re usually located out of the state of TN, if you have a Will, you have to probate that asset in that state and it may not be worth a lot of money and the more bills build up, the more frustrating it is and money could be lost. If you own time shares, it is strongly recommended that you have a revocable living trust and that the time shares are titled in the trust.
Gen. Durable Power of Attorney:
You don’t want to get an estate plan done without having this document included. There is a situation wher you may need someone to sign off on assets you own while you’re living but you’re unable to do so for instance if you’re in the hospital and can’t sign checks or pay bills. Or if you become incompetent and need someone to manage your affairs.
It must be “durable.”
Gen. Power of Attorney for Healthcare:
Another necessary document where you appoints your spouse or children (whoever you want) to make healthcare decisions for you. Especially important when it comes to end of life decisions and it prevents someone having to go to court to be appointed conservator to make healthcare decisons. Case in point, Terri Shiavo.
This all goes hand in hand with the Living Will.
The General Power of Attorney for Healthcare is a Directive to the hospital, stating that if your condition is terminal with no hope for recovery, you would authorize the hospital to withhold certain medical procedures. The hospital discusses those situations with the Power of Attorney. Make sure you have both documents as part of your estate plan. If you don’t you’re missing a key element.
Make sure you leave enough instruction and as much help to the people who are going to be put in that position.
Advanced Planning Documents:
After your five essentials are set, and there’s a foundation there’s more you can add on like
- Family Limited Partnerships
- Irrevocable Life Insurance Trusts
- Created in your life to hold a life insurance policy. This is the owner of the policy and when you pass away, the beneficiary is the trust and is not in your estate and can be used for spouse and kids.
- Charitable Remainder Trusts
- Trust you create where you retain an income interest in the trust and upon your death the remainder interest goes to charity. If you have an asset you want to sell that has low cost basis and you know you’ll be hit with a lot of capital gains tax, create and transfer the asset to the trust has the trust sell the asset the trust doesn’t pay any income tax if set up properly and it maintains an income stream to you not based on the net value of the asset (net of taxes) but the total value of the asset because the total asset is remaining in the trust. The ILIT is holding the insurance policy that is going to replace the funds that are going to the charity at your death. That’s how you coordinate the two.
- Veterans Affairs Planning
- Medicaid Planning.
There are so many kinds of trusts you can set up. Definitely give the show a listen to find out exactly what they are and please do give me a call at 800-892-4102 for your complimentary first consultation where I can walk you through your estate planning needs. Remember, estate planning is not a DIY undertaking, I do stress that you find a qualified, Board Certified Estate Planning Attorney, such as Russ Cook in Brentwood, TN. Look for a comprehensive financial advisor such as myself who works with a strong team to watch out for your estate and for your taxes.
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