When someone suffers a life threatening injury it’s time for them to get their affairs in order. When someone dies and their affairs are not in oder, their loved ones can be burdened by overwhelming tasks and obligations.
The New York Times this morning (9/6) has a good article on the various steps that need to be taken for estate planning. Having helped families after wrongful deaths and personal injuries, we have seen the consequences up close of a lack of planning. We have also had first hand experience with this issue recently and write from that experience.
Here is what families need to consider.
A living trust.
Living trusts have been promoted and over promoted. These arrangements are useful if you have a large estate, a business that will continue to operate, lots of real property, or if the spouse of the injured individual is incapacitated. In other words, if you feel that either you or your spouse may be incapacitated at some point and after the passing of the other, then a trust with a specific trustee is good idea.
But if you have an average size estate, than a trust may not be necessary. And if you are creating a living trust simply in order to avoid probate, this is not a good idea. First, you may not be able to avoid probate simply because a trust was created. If there is any real property outside of the trust, then probate will still be necessary to clear title. Second, in order to truly avoid the potential for probate, every single property must be listed as an asset of the trust and held in the name of the trust, which may require the transfer of title, which in turn may create legal fees similar to those generated by probate.
If you are going to utilize a trust, an assignment of trust is also a good idea. An assignment of trust is a legal document, usually done concurrently with a trust, that indicates more specifically that all properties both real and personal of the drafters are thereby assigned to the trust.
Always a good idea. It doesn’t matter if you have a trust or not, have a will drafted. If you do have a trust, a simple “pour over will” can be utilized and is a good idea. A “pour over will” is simply a will that “pours over” all assets of the decedent into the trust. And have your will drafted by an attorney who specializes in wills and estates and get it done right. It’s the best money you will ever spend.
Before you have your will drawn up spend a considerable amount of time deciding how you want it structured – i.e., who gets what. Your will represents your intent. So make sure it truly does.
And once you have thought about it, hired a competent attorney to draft it, discussed it in detail with your attorney, and had it drafted, don’t change it. Provide in the document for unforeseen deaths of heirs and subsequent heirs. This will ensure that once your will is created, it doesn’t need to be altered.
If you do have to alter your will, destroy the old one, draft a new one, and again make sure it is done professionally and as you want it.
Powers of attorney.
General powers of attorney and medical powers of attorney are excellent ideas and should be utilized by everyone regardless whether they utilize a will or a trust or both. And again, make sure these are done by an attorney specializing in this service.
Books have been written on this subject and there are many good ones out their if you want more information.