Estate planning is important to ensure that your wishes are carried out after your pass away. While similar to a will, an estate plan outlines the provisions for the distribution or maintenance of your assets, as well as designates power of attorney and establishes any trusts for your family. A will is simply a part of the estate plan, not the estate plan itself. In your estate planning, you’ll likely stumble across a number of terms that may seem confusing. Today, we’ll take a look at some of the more common terms and give you an idea of what each means so you can better understand your estate plan.
A living will allows you to decide how you would like to receive medical treatment should your illness be severe enough that you are unable to give informed consent. This will ensure that you’ll have the final decision regarding your medical treatment, rather than placing the burden of a decision on loved ones. This type of will is especially useful for individuals facing a terminal condition, as well as those who simply want the most complete estate plan. While it may seem inconsequential, it can help remove stress from your family should you become incapacitated.
A living trust allows you to place your assets into a trust fund during your lifetime rather than after your death. During your lifetime, you and your designated co-trustee manages the assets in the trust. You never have to relinquish control of your investments unless you want to or you become incapacitated. A living trust may also be changed or dismantled at any time during your lifetime. At your death, a successor trustee will act as your trust manager to distribute your assets to your designated beneficiaries as directed in your will.
Power of Attorney
Power of attorney grants an individual, other than yourself, the right to make health-related decisions on your behalf should you no longer be able to express consent to a treatment. Power of attorney will also allow your selected representative to make financial decisions in your stead, should the need arise. Your designated power of attorney should be given as much direction as possible so they can make decisions based on your wishes.
Stay tuned for more information on estate planning and see how having a complete estate plan will help your loved ones during a difficult time.