Whenever you decide to create an estate plan, it is important to consider several factors, whether you decide to use a Living Trust or a Last Will and Testament as your primary method of transferring assets at your death. Part of that process includes understanding the purpose of some of the other important documents which should be included in your estate planning portfolio. Those documents are:
• LIVING WILL: This document tells your health care providers that, if you are terminally ill or incurably injured and likely to die within a
short period of time, not to take any special measures to keep you alive (such as using ventilators and other life sustaining equipment).
• HEALTH CARE REPRESENTATIVE APPOINTMENT: This document gives the
named individual the power to make health care decisions for you if you are unable to
communicate with health care providers. This differs from the Living Will, because it does not require that you be diagnosed as terminally ill before decisions can be made for you about health care matters. The document covers all medical matters including the power to stop health care where appropriate.
• DURABLE POWER OF ATTORNEY: This instrument is sometimes referred to as a
financial power of attorney in order to distinguish it from the health care document. This power only is used, if you are determined by a physician to be incapacitated, or you decide, in writing, to make it effective immediately. Prior to that time, you are in charge of your own day-to-day affairs. When such a power is "activated", the person who is named, has full authority to handle all of your day-to-day needs. The power is also restricted, in that the person named cannot change the terms or intention of the estate plan which has already been put in place.
• “POUR-OVER” LAST WILL AND TESTAMENT (used only with a Trust Portfolio). In the event that assets are held in your sole name at the time of your death, this Will's sole function is to place those assets in the trust so they can be distributed according to the terms of the trust. In addition, Indiana, Michigan, and Illinois have statutes which allow a certain value of assets, in a person’s sole name (for example, $50,000 in Indiana), to avoid the need to probate the Will. Of course, if there are no assets outside of the trust, the document will never be used. It is always wise, however, to have such a document in place to avoid any future potential problems with your estate plan.
BEWARE OF THE "DO IT YOURSELF" ESTATE PLANNING SERVICES
Unfortunately, some financial institutions have partnered with non-attorney organizations, which offer legal forms for the preparation of Wills and Trusts. Those non-attorney services must show a disclaimer that might read: "We are an on-line legal forms service. We are not a law firm and we do not provide any legal advice." Some lawyers humorously refer to these services as: "Do It Yourself Surgery" or "Do It Yourself Home Furnace Repair" Without proper legal advice, attempting to create your own estate planning documents without any legal advice could lead to serious problems when it becomes necessary to use those documents. Here is a brief list of common issues with those on line document preparation services:
- With these services, you will never have any contact with an attorney. Your contact will likely be with a non-lawyer, who cannot give you any legal advice regarding the completion of the legal forms because he or she is not a lawyer. When you use an attorney for estate planning services, you will definitely have an in-person and in-depth meeting with an attorney so that he or she can do a complete review of your financial and personal situation. That will allow the attorney to prepare documents that you know are specifically tailored to your needs.
- With these services, no assistance or advice is given regarding the steps required to fund a trust. Without properly funding a trust, it is of literally no value at the time of your death and instead of avoiding probate, your assets will have to go through the probate process.
- It is important that your home be correctly titled in the name of the trust by a licensed attorney. If a deed into trust is incorrectly prepared, your homestead exemption (which is worth approximately 30% of your tax bill) will be lost.
- If a power of attorney document is not properly prepared, the person you name will have immediate access to all of your assets and will also have the ability to change any of your documents without first obtaining your permission. A power of attorney which is prepared by our office will never allow those problematic things to occur.
- If you have any in-depth questions about the estate planning forms which are being sold, (such as how they operate) the legal forms company representative is not permitted to give you any legal advice.
- If your documents need changing at anytime after they are first created, it is likely that the estate planning forms company will not be able to help you with those forms and, once again, cannot give you any legal advice regarding changes.
Have questions or want to make an appointment? Call the law office of Michael V. Riley at 219 879-4925 to set up a no-cost, no-obligation consultation regarding creating an estate plan for yourself in person, by phone, or video.