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Estate Planning

i. What is the difference between a will and trust?

A Revocable Living Trust (“RLT”) is a common estate planning tool which allows a person (“Grantor” or “Settlor”) to place his or her assets in trust and provide for the distribution of those assets upon death without the necessity of opening a probate proceeding.  During his or her lifetime and as long as he or she has the requisite capacity, the Grantor retains the right to amend and revoke the RLT.  The Grantor can designate a successor trustee(s) to administer the RLT in times of incapacity and after the Grantor’s death.

A Will is another common estate planning tool which allows a person (“Testator”) to provide for the distribution of Testator’s estate upon death.  Testator’s estate includes assets that were not placed in trust during his/her lifetime and assets that do not have a beneficiary designation.  Unlike a Revocable Living Trust, a Will must go through probate to be enforced.  A “pour-over” will is often executed at the same time as a Trust to provide that any assets not placed in the Trust will be “poured over” into the Trust upon the Testator’s death.

ii. What is a power of attorney?
A Power of Attorney is a legal document in which one person (“Principal”) grants another person (“Agent”) the authority to sign legally binding documents on his/her behalf.  If it is a durable power of attorney, the Agent’s authority survives the subsequent incapacity of the Principal.  In either case, the Agent’s authority ends upon the death of the Principal.
iii. What is an Advance Health Care Directive?
An Advance Health Care Directive is a legal document in which one person (“Principal”) grants another person (“Health Care Agent”) the authority to make medical decisions when the Principal is unable to make those decisions on his or her own.  An Advance Health Care also allows the Principal to express his or her wishes with respect to specific medical situations.
iv. How to fund a trust?
It is essential that your trust is funded with property.  Most assets will require title changes in the ownership of the assets from you, individually, to the trustee of your trust.  If you choose to place your life insurance or retirement accounts in the trust, you will need to change the beneficiary designation forms.  The firm can assist you with certain methods of funding, including transferring real property into your trust, but ultimately, funding of the trust is the client’s responsibility.
v. When should you renew your estate plan?
Having a Revocable Living Trust and/or a Will to prepare for your death is something everyone should plan for. Estate planning documents should be updated to reflect significant life changes (e.g. marriage, divorce, a birth or death in the family or significant changes to your financial condition). Following these changing life events, it is often a good time to sit down with an estate planning attorney to ensure that your estate planning documents remain legal and relevant.

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