Your estate plan is going to address the things that will take place after your passing, but you should think holistically. End-of-life issues also enter the picture, and you should prepare for these eventualities in advance.
People often become unable to communicate at the end of their lives, but decision-making may still be necessary. To account for this, you could execute legally binding documents called durable powers of attorney.
A durable financial power of attorney can be executed to account for financial decision-making, and you could name a health care representative through the execution of a durable power of attorney for health care or health care proxy.
When it comes to financial decision-making, you should understand the fact that a durable financial power of attorney would no longer be in effect after you pass away. The person that you choose to manage your affairs in the event of your incapacitation would not be empowered to administer your estate. This could be viewed as a disadvantage.
Best of Both Worlds
There is a legally binding device called a revocable living trust that can be used if you would like to satisfy multiple objectives in a single stroke.
The anatomy of a trust would include a trustee, who is the trust administrator, and a beneficiary who could receive monetary assets out of the trust. If you create a revocable living trust, you can act as the trustee and the beneficiary while you are alive and well.
In the trust declaration you name a successor trustee to administer the trust after your passing, and you also name a successor beneficiary (or beneficiaries). The successors would step in after you are gone.
It would be possible to empower the successor trustee to act as the trust administrator if you were to become incapacitated. This would serve the same purpose as a durable financial power of attorney. However, this individual or entity could also administer the trust after your passing.
Because of the above, it could be said that a revocable living trust is a more versatile estate planning tool.
A complete living trust estate plan will include a durable property power of attorney and a health care power of attorney. This will enable your successor trustee and agents to make decisions on your behalf in the event of your incapacity for issues involving property held in your trust, property held outside of your trust, and your health care.
Learn More About Revocable Living Trusts
The ability to prepare for possible incapacity as you simultaneously name an estate administrator is one of the advantages that you gain when you create a revocable living trust. However, there are other benefits that these trusts provide, and you do not have to be extraordinarily wealthy to create this type of trust.
We have prepared an in-depth report that will provide you with more detailed information about the value of revocable living trusts. The report is free, you can obtain access through this page: Free Report on Revocable Living Trusts.
Take the Next Step
We regularly offer free living trust estate planning seminars. To learn more and to reserve your seats, follow this link: Free Seminars and Workshops.