When you call a plumber or an electrician out to your house to perform work, what do these contractors bring with them? The answer of course is tools. An electrician or plumber cannot perform their work without the proper tools. Did you know that estate planning lawyers keep tools in their estate planning toolbox? It is true! Without these tools an attorney cannot do proper estate planning. In this article, I will look at a few of the different tools available to accomplish estate planning goals.
WILLS: A last will and testament is a simple or complex document that gives instructions regarding how you want assets to pass to your beneficiaries after your death. Do you have children under the age of 18 or that have a disability? Then you need to consider having testamentary trust provisions in your will. Who do you want to serve as the personal representative of your estate? You also need to consider whether you want to make specific personal property bequests to individuals, or if there is someone in your family that you want to disinherit.
REVOCABLE LIVING TRUST (RLT): A RLT is a legal document created by you for the purpose of managing your assets and transferring them upon your death. Some of the same questions raised in the will discussion above also apply to a RLT. If you executed a RLT many years ago which contains credit shelter provisions, then you need to consider whether those credit shelter provisions are still necessary or desirable. A RLT is not a tax saving tool per se. However, a RLT can be useful in many other ways including asset management and probate avoidance.
ANNUITY AND LIFE INSURANCE BENEFICIARY DESIGNATION: As a part of estate planning, you need to insure that your beneficiary designations for annuity and life insurance contracts are current and in the form that you want them to be. If all of your named beneficiaries are deceased, then the annuity or life insurance proceeds revert to your estate.
TRANSFER ON DEATH : Indiana Law allows you to execute a transfer on death deed which provides for the passing of title to real estate upon your death. This is a very useful tool if your goal is probate avoidance or to put real estate assets in a RLT upon your death. Indiana Law also allows this transfer on death concept to apply to non real estate assets such as bank accounts and stock certificates.
DURABLE GENERAL AND HEALTH CARE POWER OF ATTORNEY: Appointment of a personal representative under your will only comes into effect after your death. The designation of an attorney in fact under a Durable General Power of Attorney can be a useful estate planning tool if you suffer from an incapacity or if you are out of state for extended periods of time.
HEALTH CARE POWER OF ATTORNEY AND LIVING WILL:
If you are incapacitated and cannot make medical decisions, appointment of an attorney in fact for healthcare can allow a family member or friend to make medical decisions on your behalf. A living will is document that allows you to make a determination that you don’t want medical procedures used to prolong the dying process. The living will and health care power of attorney typically work in tandem to accomplish your desired goals.
There are many other “tools” at the disposal of an estate planning attorney to help you accomplish your estate planning goals. Some of these tools are very simple, and some of these tools are very complex. When you call a plumber or electrician to come to your house you don’t want them to use the wrong tools in addressing your problems. This same principle applies to your estate planning. Using the right estate planning tools can be invaluable to you and your family.