Most people are familiar with what wills are, but there are other estate documents that also serve important roles. Three of those are living wills, power of attorney forms and revocable living trusts.
The term “living will” does not actually refer to the disposition or management of property or other assets the way a traditional last will and testament does. Instead, a living will is a legal instrument that spells out a person’s wishes for medical care in the event he or she is not able to speak to make his or her medical wishes known. A Living may include statements about what kind of medical treatment is desired or not desired, what level of medical intervention is acceptable, and instructions for end-of-life treatment. A living will has a provision identifying who is the designated person or persons to make decisions for a person, as well as successors in the event the first chosen are unable or unwilling to act. Such designees are sometimes referred to as health care surrogates. One example is if someone feels strongly that they do not want to receive artificial nutrition if such treatments were not expected to substantially improve their condition, they might want to document their wishes in a living will ahead of time.
Living wills can make family members’ lives easier and less stressful by providing a road map of sorts, so loved ones can focus on following wishes and instructions rather than making tough decisions about end-of-life care if that becomes necessary.
Power of Attorney
Similar to a living will, a power of attorney is a document that is valid during one’s lifetime but expires the moment they die (if an earlier expiration date is not specified.) A power of attorney authorizes a trusted friend, family member or other person, or even a professional fiduciary to step in to handle financial affairs. The power of attorney can be broad, authorizing the named agent(s) to do anything the document’s creator could do, or it can be more limited, authorizing an agent to handle only certain types of transactions, under certain circumstances. There are different kinds of powers of attorney, such as a limited power of attorney and a durable power of attorney.
One reason to have a power of attorney is to enable someone else to handle financial affairs in the event the principal later becomes incapacitated and cannot handle his or her own affairs. Creating a power of attorney can ahead of time can prevent legal headaches and problems later and make life less stressful for family members if an unforeseen illness or incapacity leaves someone unable to manage their bills and transact business. Without a power of attorney, sometimes one may be forced to seek the appointment of a conservator to manage such affairs, which is a time-consuming process that may substantially burden everyone involved.
Revocable Living Trust
In some cases, there are advantages to creating a revocable living trust as the primary dispositive instrument for an estate rather than using a will. Anyone having accumulated any significant assets in life may opt to have a revocable living trust. Creating and funding a revocable living trust is often utilized so that assets properly titled within the trust have the chance to avoid passing through administration in probate court. The latter can often be a time consuming and expensive process such that assets properly titled in a revocable living trust stands to save an estate significant attorney fees. Such a trust can also establish trustees over the trust, which may include the grantor or settlor of the trust as well as successor trustees. When this is done correctly the trust becomes the owner of the assets and continues to own them at death as opposed to the individual.
Revocable living trusts can also include provisions for tax planning, leave a charitable legacy, or provide for the management and distribution of assets to children or other family members over a period of years.
As the name implies, revocable living trusts can be modified or revoked during the creator’s lifetime. Don’t confuse revocable living trusts with irrevocable trusts, which may be used in in some estates to remove assets from the creator’s taxable estate or to provide liquidity to pay estate taxes.
For more information about these matters, contact an experienced, knowledgeable attorney in Louisville today.