EZ-Estate Plan FAQs
No! This is the most misunderstood thing in probate, a will must be proved to be valid in court. Would you want me showing up to your bank with a "will" and saying give me all the money? You must get a court order proving the will valid and then the nominated executor can act.
Yes! Estate planning is not just for the wealthy. With a proper plan you can plan and care for your family after you are gone. Most importantly you will remove the burden (emotional and financial) of probate to whom ever is in charge.
A will is a legal document that allows an individual to specify what happens to their physical body and processions after they pass away.
If someone dies without a will, state law will dictate the funeral proceedings and who the heirs will be.
A person dying without a will will not be able to direct inheritance to anyone other than the immediate family regardless of the wishes of the decedent.
A will must go through probate — but when it does, this can be cumbersome and expensive for heirs.
A trust is a legal document which directs management and ownership of a grantor’s assets while they are alive.
Upon death, the ownership of the trust is owned by the “trust,” which then distributes assets to heirs (beneficiaries) per the instructions of the grantor.
The trust may include restrictions to assets, or it may offer the assets outright to the heirs and beneficiaries.
The two big advantages to having a trust include avoiding probate and management of assets post death.
Trusts can be Revocable (changeable) or Irrevocable (not changeable).
No! A living will is a document that states your wishes for your health care if you can't do so your self.
Unfortunately they have many legal holes and doctors and hospitals largely ignore them. Unless you describe the exact situation you are in, a living will is useless.
A Power of Attorney allows the person nominated to legally act on behalf of an individual.
For instance, a person with a durable power of attorney usually has the capacity to:
- Open/close accounts
- Sign legally binding documents
- Instruct transactions in financial institutions
This power can be broad or specific depending on how the POA is drafted.
Using the term “durable” is important as it denotes that the power continues to be held, even if the individual granting the power is incapacitated; if this term is not specified, the power will cease.
A Durable Medical Power of Attorney document is similar to a POA, but is specifically for medical decisions.
Many people have an advanced directive (also known as a living will) that provides guidance on medical issues. These provide helpful guidance, although they are not legally binding. In fact, most hospitals will ignore them.
The Durable Medical POA is the only document that legally grant authority to someone else to make medical decisions.
A comprehensive estate plan will utilize all of the above documents to accomplish the wishes of the grantor. Additionally, it will ensure that beneficiary designations (for Retirement accounts and Life Insurance) are updated. Often, the trust is designated as the beneficiary.
A pour over will is a "last will and testament" that instructs the executor to transfer all of the assets of the estate to a trust that is all ready created. So the estates "pours over" the assets to the trust and then follows the instructions of the trust. This type of will is only used in conjunction with a trust.
Any asset that automatically transfers to another person without the need of a court order avoids probate. Things like IRAs and Life Insurance with valid beneficiaries avoid probate. Joint assets with rights of survival transfer to the surviving owner without probate. Assets owned by a trust avoids probate. And any legal contract established prior to death, like a business buy-sell agreement avoids probate.