A will is a legal document which expresses a person’s binding decisions concerning the disposition of the assets owned in his or her name alone at the time of death and the appointment of the persons who will manage the distribution of those assets as well as the person(s) who will act as the guardian for any minor children who survive without a legal parent to care for them.
A codicil is an amendment or a supplement to a will. After the codicil has been signed and properly completed in accordance with state law, it stands as a separate legal document which adds to, omits from or otherwise alters the will.
A trust is a legal document which can be created during a person’s lifetime (called an inter vivos trust, or living trust) or which can be included in a person’s will (called a testamentary trust). A trust usually names a person or financial institution to act as trustee, who will control and manage the property placed in the trust for the benefit of another person (called a beneficiary). The property which is placed in the trust is called the corpus of the trust.
A power of attorney is a legal document by which you can authorize someone to act for you. The power can become effective immediately and endure beyond your incompetency, which is known as a durable power of attorney, or it can become effective only if you become incompetent. The durable power of attorney is a very helpful document for designating another person to make financial decisions in the event of mental or physical disability without the expensive and embarrassing process of a legal declaration of incompetence and the appointment of a guardian.
A broad power of attorney authorizes your attorney-in-fact, which is the legal term for the person you designate to act, to perform any action with regard to your property that you yourself could perform. The attorney-in-fact must act in your best interests. The power can include the power to make gifts on your behalf but it must do so expressly for the power to be used.
The person you designate to act does not have to be an attorney (as the name might suggest) but should be someone who knows you and your life situation well and whom you trust. If you are married, your spouse is usually a good choice with a back-up named in case your spouse is unable to serve.
A health care power of attorney is a document by which you give someone else, known as your health care agent, the power to make health care decisions on your behalf if you become incapacitated. The power becomes effective when a physician determines in writing that you lack capacity to make your own health care decisions. You can designate a physician to make the determination; otherwise, your attending physician will do so.
The health care power of attorney gives your health care agent the power to make broad decisions about many aspects of your health care, including whether you should receive antibiotics, whether life support should be given or removed, the type of mental health care you may receive, and certain things beyond death, including whether an autopsy should be performed and whether your organs should be donated. You can limit the powers of your agent if you choose. The health care power of attorney remains effective until you regain competency or otherwise revoke the power.
It is wise to consider the relationship between you attorney-in-fact under your durable power of attorney and your health care agent under your health care power of attorney. The two will need to interact and work together for your benefit. Sometimes having one person serve in both roles is the best decision.
Declaration of a Desire for a Natural Death a.k.a. Living Will
The declaration of a desire for a natural death is a document (better known as a “living will”) in which you can state that if you are in a terminal and incurable state or in a persistent vegetative state, then you do not want your life prolonged by extraordinary means. You may also state whether you would want artificial food and water withheld under these conditions. The declaration only comes into play if you are unable to communicate your wishes yourself. You may revoke your living will as long as you can communicate your desire to do so in some way. If you have designated a health care agent, your agent can use your declaration as evidence of your wishes.
This form will ensure that your family members will be able to speak with your health care provider about your health care. You can name family members or other people you trust who you might wish to be included as authorized recipients of your health care information. Without this form family members may have a difficult time obtaining this information.
A life insurance trust is an estate planning tool that allows you to set up a trust with the main purpose being to own life insurance in the trust on your life. The trust is +irrevocable and its terms cannot be changed once it is established. Because you are not the owner of the policy, when you die the proceeds from the life insurance do not count in your taxable estate and can be distributed to your loved ones without taxes being owed.
This trust is sometimes referred to as a wealth replacement trust because the proceeds from the policy replace for your loved ones the money that is paid from your estate for estate taxes. The trust has administrative requirements during your lifetime and a trustee must be used to handle the premium payments. The negatives of those requirements are often outweighed by the positives of the tax savings for the family.
Probate is the court proceeding which determines whether a person’s will (if any) is valid, formally appoints the executor (named in the will) or the administrator (when there is no will) to manage the assets owned in the deceased’s name alone at the time of death, approves the payment of debts and taxes, identifies the heirs of the deceased, and ensures that the property owned by the deceased is distributed as he or she directed in the will, or as state law requires if there is no will.
The administration of an estate is the court-supervised distribution of the assets held in the name of the deceased person alone at the time of death. If there is no will, the person who manages this distribution is called an administrator if male; an administratrix if female. If there is a will which names an individual or a financial institution (such as a bank trust department) to manage this administration, the term “executor” is used for a male or a corporation; “executrix” is used for a female.
If a will or trust was executed by a person who was not competent or was unduly influenced or coerced or under duress at the time the document was executed, litigation is sometimes necessary to rectify the wrong.
A will caveat is a challenge to a will that attempts to set the will aside as invalid. Typical grounds for bringing a will caveat are incompetency of the person who made the will, undue influence by someone over the person who made the will, duress of the person who made the will, or that the person who made the will was coerced to do so.
A guardianship is a court-supervised process through which a person who is incompetent has a guardian chosen by the court who typically handles both the financial and personal decisions of the incompetent. Accountings must be submitted annually for the incompetent.
Contact Bagwell Holt Smith Jones & Crowson, P.A. for more information.
