As you age and think about what will happen when you eventually pass away, an estate plan often comes to mind. However, there are many different facets to an estate plan and determining what is best for you individually can feel like a complicated decision – what is the difference between a will and a trust? How do I make sure my children are taken care of if I pass away? Who will make decisions for me if I am incapacitated?
An attorney with experience in estate planning, like Shelby Saybolt, can answer all of these questions and help guide you to making an informed decision about how to draft your estate plan to ensure your assets are protected, your wishes are adhered to even after death, and your loved ones are left with a minimal burden. See below for a comprehensive overview of the estate planning documents Shelby can draft for you and each of their purposes.
Will
- Appoints an executor who will handle the entire administration and distribution of your estate
- Outlines any specific wishes regarding asset distribution upon your death
- Appoints a guardian for any minor children in case both parents pass away
- Requires probate court involvement, which can burden your loved ones with additional costs, delay the distribution of your assets, and potentially override your desired distribution of assets
- Effective only after your death
- Public record
- Appoints trustee(s) and successor trustee(s) who are responsible for management of all assets contained within the trust
- Outlines any specific wishes regarding distribution of assets
- Protects assets from creditors
- Allows for utilization of Medicaid, as assets are no longer in your name, but rather in the name of your trust
- Avoids Medicaid estate recovery upon your death
- No probate court involvement upon death
- Effective both during and after death, just with different trustees managing the trust’s assets
- Not public record
Trust
Durable Power of Attorney
Financial Power of Attorney
- Identifies agent(s) who can make financial decisions on your behalf if you are incapacitated
- Outlines who can determine you are incapacitated (judge, medical providers, etc.)
- Agents can:
- Sign checks
- Make deposits
- Pay bills
- Contract for professional services
- Sell property
- Obtain insurance
- Manage all other everyday financial affairs
- You can limit the powers of your agent(s), e.g. restricting their ability to revoke a trust or change a beneficiary on a retirement account
- Only valid while you are alive and incapacitated, cannot be utilized once you regain capacity to make your own decisions
- Terminated upon death
Medical Power of Attorney
- Identifies agent(s) who can make medical decisions on your behalf if you are incapacitated
- Outlines what your wishes are regarding advanced care, life support, and organ donation to guide your agent in making decisions about your care
- You may limit the power of your agent(s) or outline other specific wishes regarding your healthcare
- Can outline funeral requests in a Medical Power of Attorney as well, such as whether you wish to be cremated or buried
- Only valid while you are alive and incapacitated, cannot be utilized once you regain capacity to make your own decisions
- Terminates upon death
- Method of conveying interest in real property (house, land, apartment, etc.) to:
- The name of your trust upon creation of trust
- Multiple owners with rights of survivorship, e.g. you, your spouse, and your children, to avoid any transfer of the real property upon death
- Ladybird Deed – a type of deed that only goes into effect upon your death
- Upon death, property is transferred to the named beneficiary(ies) without a need for probate involvement
- Transfer by ladybird deed is not included within your estate and therefore is not subject to recovery under Medicaid rules
- Ladybird deed gives beneficiaries a future interest in property, so this can make it more difficult to buy/sell/mortgage your property
- Provides tax benefits to the beneficiary, as transfer via ladybird deed does not constitute a transfer of ownership for purposes of uncapping the property’s taxable value
- Because the beneficiary is acquiring the property by reason of death, there is little to no taxable gains resulting from the sale of the property promptly after your death
- Note – you should add your beneficiary as an additional insured to your homeowner’s insurance immediately upon recording the deed, to avoid your beneficiary being uninsured owners of the property upon your death
Quitclaim/Ladybird Deed
Non-Probate Assets
- Accounts with designated beneficiaries will not be distributed according to a will, trust, or probate, they will go to the listed beneficiary
- These types of accounts include:
- 401K, 457B, 403B, and other retirement accounts
- IRAs
- Life Insurance Policies
- Annuities
- Property under joint ownership with a right of survivorship where there is a surviving owner will convey to the surviving owner(s)
- Car Title with two owners
- Mobile Home Title with two owners
- Property with a transfer on death designation