An estate plan is really a set of instructions that you put in writing for others to follow.
When you are alive, operative estate planning documents include Power of Attorney documents, Trusts and Advanced Care Directives (this document instructs health care providers and your agents about your wishes in the event you are in a permanent terminal state, as determined by your treating physicians).
Power of Attorney (or “POA”) documents are powerful and necessary for anyone over age 18. In a POA, you designate a person (or persons) who can make financial or health decisions on your behalf if you lack the ability to make those decisions for yourself. A health or financial POA obviates the need for a court to appoint a guardian, because you have already selected someone you trust to act on your behalf if and when the need arises.
Other documents that express our wishes while we are alive include Trusts. These documents are designed to hold title to your assets (including but not limited to bank accounts and real estate), so that when you die, the trusted person you select as your trustee can pay your bills and distribute the remaining assets to the beneficiaries named in the trust without going through probate.
There are many different types of trusts, including: Revocable Trusts (you can change the terms of the trust and take assets in and out of the trust at any time), Special Needs or Supplemental Needs Trusts (intended to protect assets if a person receives government benefits), and Irrevocable Trusts (often used for Medicaid asset protection planning).
Trusts are also designed to maximize state and federal tax exemptions and to reduce tax liability, or to designate a guardian and hold assets for minor children.
You can also place some portion of your assets in a Limited Liability Company, or LLC. The assets are held by the corporate entity and managed and distributed pursuant to the instructions in the Limited Liability Company's Operating Agreement.
Estate planning also includes a Will. This document indicates how to distribute your estate assets when you die and to designate a guardian if you have minor children. A will can be “simple” or it can contain a Supplemental Needs Trust within it, that can receive the assets of a beneficiary that qualifies for government benefits, so as not to disrupt those benefits.
If a person elects not to create a will or trust; at their death, their assets will be distributed pursuant to the intestacy laws of their state of residency.
Other estate planning documents to think about are Deeds and Transfer on Death Deeds. These documents allow you to transfer property to a trust, or to another person or entity, and can be effective in Medicaid asset protection planning.
Kristina Mattson Law can work with you to design and implement the estate plan that best fits you and your family’s needs.