1. Are there differences between a living will and a power of attorney for health care?
A: A power of attorney for health care designates an agent to make healthcare decision for you for medical treatment whether death is imminent or not. A living will is a statement to the health provider that you do not want extraordinary means to be used to keep you alive. We always use a living will in conjunction with a power of attorney for healthcare as a safety net in cases where the Agent is not able to perform pursuant to the power of attorney for healthcare.
2. How do I know if a living trust is appropriate for me?
A: A Living Trust can:
A. Reduce the cost of estate administration (Probate);
B. Reduces the need for a Guardian if you are incompetent;
C. Keeps your estate planning private; and
D. Can provide through the use of an A/B trust substantially reduced or eliminate estate taxes if you are currently married.
3. What is a durable power of attorney?
A: A durable power of attorney is a document that gives another person the authority to manage your affairs even after you become incapacitated.
4. What exactly is probate?
A: Probate is a court proceeding in the county in which the decedent died. It is the legal process by which assets are properly passed from a decedent to the surviving heirs. Assets that have titles must go through probate if they were titled solely in the name of the decedent, without a Trust and without a Survivorship feature or a beneficiary designation. When the decedent dies, the “chain of title” is broken. The chain is reconnected by the probate court and the court issues new titles. Before the probate court passes title of the assets to the heirs, it wants to insure that all creditors have been paid, taxes have been paid and that all disputes are settled. The major drawback to probate is the time involved, usually 6 months to a year, and the expense (mostly attorney’s fees.)
5. Are there assets that are not subject to probate?
A: Yes. As mentioned above, probate can be avoided with a Survivorship feature in the deed or title to the assets. Also, many assets allow a beneficiary designation such as life insurance, annuities and retirement assets such as IRAs, 401ks, etc. A Revocable Trust is perhaps the best way to avoid probate.
6. I have a valid Will leaving everything to my children. My spouse and I own our home as Joint Tenants WROS. In addition, I have named my spouse as the beneficiary of my IRA account and my life insurance benefits. What controls the distribution of these assets upon my death?
A: Upon your death, the real property will pass automatically to your spouse as the joint owner, with rights of survivorship. Also, the beneficiary designation on your IRA and life insurance will trump the Will. In effect, even though the children are named as the beneficiaries of your Will, they will not receive any of the assets. Only assets titled in your name alone, with no named beneficiary, or your “estate” named as the beneficiary, will be covered under the Will and will pass to the beneficiaries named in your Last Will and Testament.