There are a lot of terms in the field of estate planning that sound very similar. As a result, people often lump them together assuming they are different ways of saying the same things.
This is sometimes true, but for the most part, it is not. With this in mind, we will look at two commonly used overlapping terms in this post.
Living Will
In some cases, medical professionals can keep people alive indefinitely through the use of artificial life-sustaining methods. This can be true even if there is no hope of recovery.
How would you feel about the use of life support if you were in this situation? You can answer that question in a legally binding manner if you execute a living will.
It is possible to go through each different life support technique if you choose to do so, and you can add your comfort care medication and organ donation choices.
While we are on the subject, a living will is an advance directive for health care. There is another directive called a durable power of attorney that should be part of your incapacity plan.
With this document, you name someone to make medical decisions on your behalf if you become unable to communicate them yourself. These would be situations that are not specifically covered in the living will.
A HIPAA release should be added to give your representative the legal right to access your health care records.
Living Trust
A living trust is a document that is used to facilitate asset transfers after you are gone and to control the management of trust assets if you become incapacitated. If you assume that you should use a simple will because you are not extremely wealthy, you may want to reconsider.
When you use a will, it is admitted to probate, and the court provides supervision during the administration process. This will take about eight months at minimum in most jurisdictions, and it can take longer, often 18-36 months in California.
The inheritors receive nothing while the estate is being probated, and there are expenses that accumulate that reduce the value of the estate. These are a couple of the major drawbacks, but there are others.
If you have a living trust as the cornerstone of your estate plan, the trustee that you name in the document would distribute assets without a probate. There would be no loss of control while you are living, because you could act as the trustee and the beneficiary.
Even if you have no problem with probate, there are other benefits. You can include spendthrift provision to protect the inheritance from your beneficiary’s creditors. Also, when you establish the trust agreement, you can instruct the trustee to distribute limited assets over a period of time.
The assets are consolidated in one place, and this allows for a streamlined estate administration process. A joint living trust can also be a very efficient solution for married couples that are in possession of a good bit of community property.
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Schedule a Consultation Today!
Written information is great, and webinars are even better, but at some point, it is time to put a plan in place. If you are ready to take that step, we would be more than glad to help.
You can schedule a consultation at our Burbank, CA estate planning office if you call us at 818-937-2335. There is also a contact form on this site that you can use if you would like to send us a message.
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