We all need to plan our estates. However, not everyone needs the same documents. In this post, I will list documents that estate planners commonly use. Based on what is listed here, you can decide what is best for you. Because every person’s case is different, and because estate planning law varies widely from state to state, it is recommended that you consult with a competent estate planning attorney or financial advisor.
Wills
A will is a document where you specify how you want your property distributed after you die. You can revoke or change a will at any time before your death.
A disadvantage of a will is that in general, your heirs will have to go to probate court in order to distribute your property. Because probate court is expensive and time-consuming, many people create other estate planning documents in order to avoid the need for an estate probate attorney.
Trusts
A trust is a legal entity where one person (the trustee) manages property for the benefit of another person (the beneficiary). While trusts may be used for purposes other than estate planning, trusts are often used for estate planning, because a trust has an infinite life, and the trust will survive after you die. If property is in trust, the property generally does not have to go through probate court. If you create a trust, you can specify whether the trust is revocable or irrevocable. Trusts are often used to provide for someone who can’t manage the money themselves, such as minor children or incapacitated persons.
Documents placing property in joint tenancy with right of survivorship
If two or more persons hold property in joint tenancy with right of survivorship, then when one person dies, the survivor automatically becomes the owner of the property. No court action is necessary to transfer the property upon your death. An advantage of joint tenancy is that it is a very quick and painless way to transfer property after death. A disadvantage of joint tenancy is that if you place property in joint tenancy, the other joint tenant immediately becomes the owner of the property as soon as you sign the document. If you have second thoughts about the joint tenancy, you can’t undo the joint tenancy without the other joint tenant’s consent. Also, if you want to sell the property, you can’t sell the property without the other joint tenant’s consent.
Transfer on death deeds
Some states allow you to execute a transfer on death deed. If you execute such a deed, you state that property will transfer to another person immediately upon your death. Like joint tenancy, the property will transfer quickly and painlessly, without probate court. Unlike joint tenancy, you may generally revoke a transfer on death deed any time before you die. Also, after you execute a transfer on death deed, you can usually sell the property without the transferee’s consent. A disadvantage of transfer on death deeds is that sometimes, the transferee must take specific steps to have the property retitled in his name; if he does not know about these steps, or fails to take them, the transfer on death deed may be rendered void.
Payable on death
For a bank or other financial account, you can often specify that the account will be “payable on death.” When you die, the payable on death beneficiary takes your account without any court action.
Advance directives
An advance directive is a document where you specify what your desires will be if you have a terminal or incurable illness, or if you become incapacitated. You may specify that you do, or do not want, life-sustaining treatment, including food or water. An advance directive is sometimes called a living will.
Do-Not-Resuscitate Orders
In a Do-Not-Resuscitate (DNR) order, you simply say that you do not want to be resuscitated if your heart stops beating or if you stop breathing. While many people confuse DNR orders with advance directives, they are not the same thing. A DNR order only deals with what will happen if your heart stops beating or if you stop breathing. An advance directive is broader – in an advance directive, you state your wishes if you have a terminal of incurable illness, or if you become incapacitated.
Powers of attorney
In a power of attorney, you give someone else the power to transact business for you. One type of power of attorney is a “springing durable” power of attorney. In a springing durable power of attorney, you specify that you want the power of attorney to take effect when you become incapacitated. It’s called “springing” because it “springs” into effect when you become incapacitated; it’s called “durable” because it continues to last after you become incapacitated.
Nominations of guardian
In a nomination of guardian, you choose someone to act as guardian for someone. Many people with children nominate a guardian who will take care of their children, if the parent dies when the children are still young. You may also want to nominate a guardian if you have an adult child who is disabled. Also, you can nominate a guardian for yourself, in the event that you become incapacitated.
Contractual arrangements
You can also make a contract with someone as to how they will receive your property. Often, financial institutions and insurance companies allow you to make such arrangements, so that the money you have with the financial institution or insurance company will easily pass when you die. One common type of contractual arrangement is the “payable on death” benefit (see above.) Talk to your bank or insurance company and see what type of contractual arrangement they will offer.
Lifetime gifts
Often, a simple means of distributing your estate is to give away property during your lifetime. Everything is done while you are still alive, and after you die, the people already have your property and don’t need to do anything.
Conclusion
Estate planning is important, but it can also be complex. Don’t let it overstress you. If you find estate planning too complicated, or if you have questions about planning your estate, speak to an estate planner or financial advisor today.
Author Bio:
Kyle Persaud founded Persaud Law Office to assist the residents of Bartlesville, OK, and surrounding areas, with a range of legal needs. As a civil litigation attorney in Bartlesville, OK, Mr. Persaud deals with a wide variety of family law issues, including estate planning. Mr. Persaud received his B.A. from Oklahoma Wesleyan University and his law degree from the University of Tulsa.
Discussion about this post