Last Will & Testament:
A Last Will & Testament, or "Will", allows the person who issues it, known as the "testator", to decide who will be in charge of his or her estate and who will inherit his or her property after death. If a person dies without a Will, disposition of the property and assets that the decedent owned at the time of his or her death usually will be determined by the governing state's "intestacy" laws, which may be at odds with the person's actual wishes before passing. Beyond enabling the testator to ensure that his or her wealth will distributed as desired after passing, a Will further enables the testator to provide that property and assets will be placed into a certain type of trust known as a "testamentary trust" for the health, maintenance and education of any child who might still be a minor at the time of the testator's passing. In a Will, the testator also may select and appoint preferred persons to become legal guardians for any such minor children.
Revocable Living Trust:
To be implemented, a Will requires probate administration in court after the testator's passing. Probate, however, has its drawbacks. Probate necessarily adds costs (including court costs and attorney's fees), takes time and renders the estate's debts and assets subject to public disclosure. An alternative legal instrument through which a person can see that his or her wishes are met after passing, but without any need for probate administration, is a Revocable Living Trust. A properly crafted and adequately funded Living Trust enables the person who issues it, known as the "settlor", to meet the objectives of a Will, while avoiding probate administration and its attendant long-run costs and burdens. Use of a Living Trust, in lieu of a Will, also may help reduce or altogether avoid estate taxes, maintain privacy and avoid the need for a judicial proceeding in the event the settlor becomes disabled.
A Living Trust functions like a Will inasmuch as it dictates what will happen to the settlor's property and assets after his or her death. Probate is nonetheless avoided because the creation of a Living Trust, unlike the creation of a Will, involves transfer of the settlor's property and assets while he or she is still living. Specifically, the settlor transfers his or her assets to the Living Trust, more precisely to one or more designated trustee(s), through a relatively simple process known as "re-titling".
Despite the immediate transfer of property and assets, the creation of a Living Trust does not change the settlor's lifestyle (unless, of course, the settlor wants such a change). In most instances, a Living Trust, particularly one primarily created for estate planning purposes, dictates that the settlor's assets are to remain fully accessible to, and used for the benefit of, the settlor during his or her lifetime. Further, the settlor is permitted to designate himself or herself as trustee, so that, as a practical matter, the settlor will continue to enjoy full ownership, control and use of his or her property, assets and related income during his or her lifetime. Further, in the case of a Revocable Living Trust, the settlor may readily dissolve or modify the Living Trust as desired during his or her lifetime (just as a testator may do with a Will during his or her lifetime).
A Living Trust, particularly one primarily created for estate planning purposes, typically appoints a successor trustee to step in if the settlor becomes disabled or once the settlor has passed away. In most instances, the settlor designates as successor trustee a relative, a friend or some other person whom the settlor would implicitly trust with important responsibilities regarding the settlor's personal and financial affairs. Sometimes the settlor designates an institutional trustee, such as a bank or an attorney, to serve as successor trustee. When the time comes, the successor trustee functions much like a personal representative (or executor) under a Will, but, again, without any need for probate administration.
Finally, a Living Trust may be jointly issued by a couple, who, in turn, may appoint themselves as co-trustees, with a right of survivorship. Co-successor trustees also may be appointed.
Special Needs Trust:
For a child or adult with special needs, a Special Needs Trust (sometimes also known as a Supplemental Needs Trust) can be issued to create a supplemental fund that provides benefits to the special needs beneficiary, without impairing the beneficiary's right also to receive special benefits available under SSI and Medicaid. If a Special Needs Trust is properly crafted, the property and assets received by the beneficiary will not be treated as income. Although it is usually a parent or parents who issue and fund a Special Needs Trust, a Special Needs Trust can be issued by other caring people, such as non-parental relatives or even close friends who want to help a child or adult with special needs as part of their estate planning.
DURABLE POWER OF ATTORNEY & HEALTHCARE SURROGATE DESIGATION:
A person who issues a Durable Power of Attorney & Healthcare Surrogate Designation can avoid costly and burdensome judicial proceedings for the appointment of a guardian of the person and/or his or her property in the event the person becomes mentally incapacitated during his or her lifetime. Although it is often presumed that a spouse is automatically vested with the legal power to take care of financial and healthcare matters for their incapacitated loved one, that is not always the case. While a person is of sound mind, he or she can issue a Durable Power of Attorney & Healthcare Surrogate Designation to vest a spouse, relative, friend or any other trusted person with legal authority to handle the person's affairs, both generally and in the event the person thereafter loses the mental capacity to make important decisions for himself or herself. These instruments can be of invaluable assistance to family members who want to do what is in the best interest of an aging loved one in accordance with his or her wishes.
Advance Healthcare Directives:
An Advance Healthcare Directive (sometimes also known as a Living Will) allows a person to dictate, in advance, the circumstances under which he or she would not want artificial life-prolongation in the event a dire medcal condition were to prevent the person from conveying those wishes to his or her family and healthcare providers. This instrument not only can ensure the issuer's wishes will be honored in the most trying of circumstances, but it also can spare the issuer's loved ones the burden of having to make the toughest of decisions and give them peace of mind.