ESTATE PLANNING TERMS TO KNOW
According to an annual survey conducted by the website Caring.com, the pandemic brought home the message that people need to plan for any contingency in their lives. Nothing is guaranteed, so everyone needs to put in place a plan for the future of their loved ones and for themselves. This is what is known as estate planning.
Unfortunately, the 2021 Caring.com survey also found that almost two-thirds of all Americans have not yet even created such a basic estate planning instrument as the last will and testament.
Proper estate planning goes far beyond just wills, however. Trusts, powers of attorney, living wills, and other instruments round out a comprehensive plan for your future.
Outside of the will, many of these documents are unfamiliar to most Americans, but they are essential in creating a plan for the future well-being of you and your loved ones.
If you’re in the greater Los Angeles area, including Sherman Oaks, Studio City, West Hollywood, and Beverly Hills, contact the Law Office of Rodney Gould. A legal practitioner for more than three decades, Attorney Rodney Gould will meet with you, discuss your personal situation, and then help you create the documents needed to provide peace of mind for you and your loved ones.
Important Estate Planning Terms
Here are some of the most common terms used in estate planning to help orient you and give you a better understanding of what estate planning entails.
ESTATE: When it comes to the distribution of one’s property or assets after death, an estate is considered to be anything held in that person’s name solely. Jointly held assets with the right of survivorship (such as a home), joint bank accounts, and life insurance and retirement policies with named beneficiaries pass automatically to the joint owner or designated beneficiary. Everything else is the person’s estate subject to distribution.
WILL: Also known as a last will and testament, the will is a basic document to name beneficiaries for your estate. The will also designates a personal representative to manage the settling of your estate and the distribution of its assets to beneficiaries. The personal representative becomes what is known as the executor when the will goes through probate court.
PROBATE: This is the court-supervised distribution of estate assets following someone’s death and is necessary if the person dies without a will (called dying intestate) or dies with a will. A last will and testament does not circumvent probate, but a trust can.
TRUSTS: There are various applications for the legal document known as a trust. The most common is no doubt the living trust, also known as the revocable trust because it can be modified or canceled at any time. The living trust names a successor trustee who will perform the same duties as the personal representative does in a will but without having to go through probate court. In addition, the successor trustee will also take over management of your estate if you become incapacitated. An irrevocable trust, on the other hand, cannot be modified. It is used mainly as a hedge against creditors and litigators. There are other forms of trusts as well.
POUR-OVER WILL: Creating what is called a pour-over will is the legal tool necessary for pouring assets not specifically named in your living trust into that trust when you die. This is another step in avoiding probate.
ADVANCE DIRECTIVE: Also known as a living will, an advance health care directive sets forth your medical treatment choices should you end up in the hospital incapacitated and unable to speak for yourself. The advance directive also names a health care agent, who will convey your medical treatment wishes to the attending physicians.
POWER OF ATTORNEY (POA): A power of attorney can take different forms as well, but it basically grants either limited or complete authority to a named agent to act on your behalf in your financial and other affairs. It can be limited both in scope and in duration, or it can be general and/or durable (though a durable POA can be revoked). It can also be “springing,” meaning that it takes effect only when certain conditions are met, such as your incapacitation. A power of attorney will often accompany the execution of a trust.
CONSERVATORSHIP: If you become incapacitated and don’t plan in advance for the eventuality (almost 80 percent of the elderly face issues of incapacitation), the court may appoint a conservator, also called a guardian, to manage your affairs for you with total control. You can avoid this through the living trust, a durable power of attorney, and an advance health care directive.
How Rodney Gould Can Help
Though there are online forms you can download for many of these documents, creating a valid will or trust or another estate planning document is not a slam dunk. One small miswording or misstep can bring the legality of the document into question. You may create a living trust and end up in court anyway as legal challenges mount.
Every person is different, and every person’s situation is different, so a one-size-fits-all document is not going to meet everyone’s needs. For that, you need the help of an experienced and knowledgeable estate planning attorney to tailor everything specifically for you and yours.
If you’re located in the greater Los Angeles area, contact the Law Office of Rodney Gould to begin the estate planning process or to review what you have in place to update and augment your existing documents. Schedule a free consultation today.