October 1, 2024
Whether you choose a will-based or living trust-based estate plan, it’s important to include all the necessary documents to address potential incapacity and other concerns.
When creating an estate plan, it’s important to make sure your wishes are honored both during your life and after your passing. Whether your estate plan is based on a will or a living trust, there are key documents that work together to protect what you own, provide for your loved ones, and ensure you are cared for in the event of incapacity. Understanding these core documents can help you make informed decisions about your estate planning strategy.
Below, we will discuss the essential components of an estate plan, whether your primary vehicle is a will or a living trust, and cover important documents that every comprehensive estate plan should have.
A will-based estate plan is a traditional method of planning for the distribution of your assets. A last will and testament (commonly called a “will”) is a legal document that outlines how your property and assets will be distributed after your death.
This is the foundation of your will-based estate plan. Your will specifies who will inherit your assets, who will be the guardian of your minor children, and who will be the executor of your estate. However, it’s important to note that assets governed by a will go through the probate process, which can be time-consuming and public. Probate can also be costly, depending on the complexity of the estate.
If you have minor children, your will allows you to name a guardian to care for them in the event of your death. This is a critical document for parents to ensure that your children are cared for according to your wishes.
A durable power of attorney (DPOA) is a document that appoints someone to handle your financial affairs if you become incapacitated. This could include paying bills, managing investments, or handling real estate transactions. Without this document, a court may need to appoint a guardian, which can be a lengthy and expensive process. A DPOA is crucial whether you have a will or a living trust.
In the event you become incapacitated and unable to make medical decisions for yourself, a medical power of attorney appoints someone you trust to make healthcare decisions on your behalf. This document ensures that your healthcare decisions align with your values and preferences.
Also known as a medical directive or living will, this document outlines your preferences for end-of-life care. It typically addresses life-sustaining treatments such as resuscitation, intubation, or the use of feeding tubes. By clearly stating your wishes, you can relieve your family from the burden of making difficult decisions.
A HIPAA release allows your appointed individuals, such as your medical power of attorney, to access your medical information. Without this document, healthcare providers may be prohibited from sharing your medical records with your loved ones, even if they are responsible for making decisions about your care.
A living trust-based estate plan is often preferred by individuals seeking to avoid probate and keep their financial affairs private. A revocable living trust (RLT) is a legal entity that holds your assets during your lifetime and distributes them after your death according to your instructions. Many individuals use living trusts as an effective way to bypass the public probate process while retaining control of their assets.
The primary document in a living trust-based estate plan, a revocable living trust holds your assets while you are alive and provides instructions for their distribution after your death. Unlike a will, a living trust allows your assets to avoid probate, offering privacy and expediency. As the grantor, you maintain control of the assets in the trust during your lifetime, and you can revoke or amend the trust at any time. Upon your death, the trustee (whom you appoint) takes over, managing and distributing the trust’s assets according to your wishes.
Even if you create a living trust, you will also need a pour-over will. This document ensures that any assets you did not transfer into your living trust during your lifetime will be transferred (or “poured over”) into the trust upon your death. While it won’t avoid probate for these assets, the pour-over will acts as a safety net, ensuring all of your assets are distributed according to the terms of your trust.
Just like a will-based estate plan, a living trust-based plan requires a durable power of attorney to handle financial matters if you become incapacitated. The trustee will manage trust assets, but any assets not owned by the trust will need to be managed by your appointed agent under the durable power of attorney.
In a trust-based estate plan, a medical power of attorney is still necessary to appoint someone to make healthcare decisions for you if you are incapacitated. This ensures that a trusted individual can advocate for your healthcare preferences.
The directive to physicians remains a critical document whether you have a will or a living trust. It allows you to specify your end-of-life care preferences, ensuring that your loved ones and healthcare providers are aware of your wishes.
Like a will-based estate plan, a HIPAA authorization is essential in a living trust-based plan to allow your designated individuals to access your medical records.
For parents, a guardianship declaration is crucial regardless of whether you have a will or a trust. This document allows you to name a guardian for your minor children, ensuring their care in the event of your death.
In addition to the core documents listed above, there are several other considerations that may be important depending on your unique circumstances:
Ensure that your beneficiary designations for retirement accounts, life insurance policies, and other financial accounts are consistent with your overall estate plan. These designations will often supersede the instructions in your will or trust, so it’s essential that they are up to date.
If you create a living trust, it’s important to fund the trust by transferring ownership of your assets into the trust. This includes real estate, bank accounts, investment accounts, and personal property. Any assets not properly transferred into the trust will not benefit from the probate-avoidance features of the trust.
If you own a business, you’ll want to consider additional planning for the succession of your business. Your estate plan can address who will manage or inherit your business, ensuring a smooth transition.
Creating a comprehensive estate plan is essential for protecting your assets, providing for your loved ones, and ensuring that your wishes are honored in the event of incapacity. Whether you choose a will-based or living trust-based estate plan, it’s important to include all the necessary ancillary documents to address potential incapacity and other concerns.
At The Curtis Law Firm PLLC, we help clients across Katy, Fulshear, Richmond, Cypress, West Houston and the surrounding areas design tailored estate plans that meet their unique needs. Contact us today to schedule a consultation and ensure that your estate plan is comprehensive, effective, and up to date.
We offer Free Initial Consultations. Click the link below to choose a time to meet with our attorney.
Post Tags :
Estate Planning, Trusts, Wills
Share :
Jeremy is a proud husband and father of three. In his free time, he enjoys painting and cheering on his alma mater. He is licensed to practice law in Texas and California and focuses on the areas of estate planning, business law, and advanced tax strategies.
We serve clients in Katy, Fulshear, Richmond, Cypress, West Houston, and throughout Texas.
We work in the areas of Estate Planning, Business Law, & Advanced Tax Planning.
Copyright © 2024 The Curtis Law Firm, PLLC
