What is a Last Will and Testament?

Generally, a Last Will and Testament provides for the distribution of certain assets at the time of death through a Court process called probate. A Will cannot, however, govern the disposition of assets that pass outside the probate estate (such as certain joint property, life insurance, retirement plans and employee death benefits) unless those assets are payable to the estate. Wills can be of various degrees of complexity and can be utilized to achieve a wide range of family and tax objectives. Perhaps more important, though, is that a Will can be used to designate a guardian for any minor or disabled children.

What is a Revocable Trust?

A Revocable Trust is an agreement among parties wherein a trustee is responsible for managing assets during lifetime, and thereafter a successor trustee is charged with honoring the trust-maker’s wishes, which can be modified by him or her at any time. This is quite similar to the job of an executor under the Last Will and Testament, although a trustee is not under the direct supervision of a probate court, meaning that the administration of a trust can be accomplished in an expeditious fashion and at a reduced cost.

What is the difference between a Will and a Revocable Trust?

Wills and Revocable Trusts are used for different purposes. They are similar in that they both allow you to designate exactly how you want your assets and other personal property to be distributed to your beneficiaries after you die. The primary difference between a Will and a Revocable Trust is that a Will does not avoid a probate proceeding, while a Revocable Trust does avoid probate. A Revocable Trust is administered outside of the probate court after death.

Who needs a Revocable Trust?

If your individually owned assets are more than $75,000, then a Revocable Trust is probably worth consideration. A Revocable Trust can:

  • Reduce the cost of estate administration (probate).
  • Reduce the need for a Guardian if you are incompetent.
  • Keep your wishes private.

What is a durable power of attorney?

A durable power of attorney is a document that gives another person the authority to manage your financial affairs even after you become incapacitated.

What is the difference between a power of attorney for health care and a living will?

A power of attorney for healthcare designates a surrogate to make healthcare decisions for medical treatment whether death is imminent or not. A living will is a statement to the health provider that you do not want heroic or extraordinary means to be used to keep you alive if you have no brain activity or are suffering from a terminal condition. Living wills are often used in conjunction with powers of attorney for healthcare to address all medical decisions.

When should an Estate Plan be reviewed?

If you already have an estate plan, it should not be considered permanent. Your circumstances, as well as your desires, will likely change over time. Therefore, estate plans should be reviewed at least every two years, and any important changes in your life demand immediate review. These changes include: birth, death, marriage, divorce or disability of you or a beneficiary; substantial changes in net worth of you or a beneficiary; and changes in tax law.