Estate planning often uses several different instruments to achieve the best results for each individual. Below are brief explenations of some of the more common elements of estate planning. All information, content, and materials available on this page are for general informational purposes only.
A will is a document left by the decedent (the party who has died) recording their wishes for their estate. It is important that a will be executed properly with the necessary formalities to prevent any complications during the eventual probate. If a party dies without a will, any property in their estate will pass according to the state's intestacy laws.
After the passing of the decedent, a will enters probate. This is the process the court uses to appoint a personal representative and verify that the decedent's wishes are honored. The court will then take whatever steps are necessary to close the estate. It's important to consult an attorney when creating your will to ensure the will is valid and the signing is performed properly.
A trust is an instrument for conveying interest where a trustee is designated to hold legal title and manage the property interest for a beneficiary who holds the equitable title. In short, a trustee manages the property in the best interests of the beneficiary. Creating a trust means laying out the instructions in a clear trust instrument which will designate the relevant parties, responsibilities, and limitations.
Trusts can be used for various estate planning purposes. A revocable living trust allows the creator to freely manage and use any property that they have placed in the trust. Trusts can also be used to minimize tax exposure for state and federal estate taxes, create spendthrift provisions to protect against dangerous spending, and properly plan estates around families with previous marriages.
An important part of estate planning is preparing the necessary documents in case of incapacitation or altered mental state. Advanced directives are documents that express the specific wishes of the incapacitated party regarding end of life care, specific invasive medical procedures, and a clear chain of command as to the party's treatment.
A durable power of attorney is a document which only becomes active upon the incapacitation of the relevant party. Once effective, the party designated by the durable power of attorney may then act in standing of the incapacitated party for the purposes of paying bills, handling finances, making business decisions and handling contracts.
After death, the decedant's estate will enter probate. This is the judicial process for closing the estate and taking care of any outstanding tasks. Closing the estate includes distribution of assets and notifying any potential creditors of their rights to file a claim against the estate for any unpaid balance. This is in addition to closing all of the estate's outstanding accounts and canceling any services that the estate no longer requires.
Through proper estate planning, a party can maximize the number of assets that pass outside of probate, and thus avoid the costs associated with the probate procedure. An experienced attorney can assist with the estate administration procedure by minimizing costs and ensuring proper transfer of assets.