Wills  -  Living Wills  -  General Power of Attorney  -  Living or "Inter
      Vivos" Trust
   -   Credit Shelter or Charitable Trusts   -    Other

Estate Planning Tools for Everyone
By Bruce Metzger

• Wills

A will directs who receives your assets upon your death. It allows a lot of flexibility in how you direct the disposition. You may leave your assets to any person you choose, except you are required to make certain provisions for your spouse. You are not limited to particular members of your family. A will allows you to make special provisions for the financial security of minor children. After your death, your will is offered for filing with a court, who will then supervise the collection and distribution of your assets. Any debts that you owe at your death must first be paid before your heirs may receive their share. The process, typically called "probate", normally takes six to nine months to complete. (Sometimes it can be completed in as little as four to five months.) In your will, you will name a "personal representative", who is responsible for administering your estate during this period.

• Living Wills

A Living Will is a directive to your physician and other health care providers not to take extraordinary measures to keep you alive if your condition is terminal, and you are unable to communicate your desires to your physician. In other words, it keeps you from "being plugged into the machines" if it would only unnecessarily prolong your dying. The Living Will may also be accompanied by or be a part of a health care power of attorney. A health care power of attorney appoints a trusted family member or friend to make medical decisions on your behalf if you are unable to communicate with your physician.

• General Power of Attorney

A General Power of Attorney appoints a person, called an "attorney-in-fact", to act as your agent for all of your financial and property affairs. Typically, spouses appoint each other as their attorneys-in-fact, with a trusted family member as a secondary choice. The General Power of Attorney allows one spouse to act on behalf of another when the other has become incapacitated, either mentally or physically. It is also handy when one spouse may be unavailable and a signature is needed quickly. The General Power of Attorney may prevent the need for a guardianship when you become incapacitated. A guardianship is an involved court proceeding, and generally should be avoided.

The Will, Living Will, and General Power of Attorney have been referred to as the three legs or triad of estate planning. A good estate plan needs all three, much as a stool needs at least three legs to be supported.

Other Estate Planning Tools

• Living or "Inter Vivos" Trust

A Living Trust is an agreement in which you transfer your assets to be managed by the trust during your lifetime, typically for your benefit. After your death, you may provide for the trust to operate like a will, distributing your assets to your designated beneficiaries. Or you may provide the trust to continue after your death, with the trustee to manage the assets for the benefit of the persons, such as your spouse or children. The Living Trust avoids the expense and time of probate. It is not for everyone, however. The time and expense of administration during your lifetime may outweigh the time and expense of probate. Contrary to popular belief, the Living Trust does not usually avoid inheritances taxes any more than any other estate planning tool can accomplish.

• Credit Shelter or Charitable Trusts

On a large estate, you may be subject to Federal Estate Tax. Implementing a Credit Shelter or Charitable Trust may help you minimize or avoid payment of Federal Estate Tax. The estate plan with these trusts is complicated, and should not be attempted without consulting your attorney and tax advisor.

• Other

Joint title, pay-on-death bank accounts, and designating beneficiaries for retirement accounts and life insurance are some other methods of insuring the orderly transfer of your estate after your death. There is no ‘one size fits all’ estate plan, and you should not use any tool of estate planning without the advice of your attorney.