Spring is here in all its glory. Usually, that means people begin cleaning out closets and ridding the house of all the dusty stuffiness accumulated during the long winter months. It means people begin planting flowers, replacing mulch, planting grass and freshening up the paint around their property.
Spring is also a good time to take inventory and spruce up your estate plan. It is important to make certain your estate plan is up to date and meets your current needs. There are many ways to organize and distribute an estate. Picking the method that best suits you can change over time as your needs change.
Living Trusts are commonly used instead of a Last Will and Testament. These documents go into effect during your lifetime. The individual actually serves as the trustee while living. When the individual dies, the successor trustee is able to assume authority and follow whatever instructions were given in the trust document for managing or distributing property. Living trusts are very popular among individuals wishing to avoid the probate process because the trustee can act without the need to obtain authority from a probate court.
A Last Will and Testament allows an individual to specify how his or her property will be distributed. If the individual does not have a Will (or other asset distribution mechanism such as a trust) state law will determine the individuals that receive property. Not having a Will imposes additional requirements on the administrator of the estate. Additionally, state law may distribute property in a manner that would be completely different from the manner that the individual would have directed if he or she had taken the time to prepare a Will.
Asset protection can mean many things: it may be estate tax planning; it may be a trust (either in a living trust or written into the Will) to give guidelines over a child’s inheritance; it may be a special needs trust for a child or grandchild that has a disability; it may be a retirement trust that allows IRAs to continue to be held for the benefit of the beneficiary for the beneficiary’s life expectancy (this type of trust allows your IRA to continue to grow tax deferred and allows beneficiaries and even distant beneficiaries to have a creditor secure, tax deferred benefit for many years); or, it may be planning for long term care so that there are benefits remaining after death for the intended beneficiaries.
In addition to making certain proper measures are in place after your death, it is also extremely important to make sure things are in order in the event you become incapacitated during your lifetime. Powers of attorney granting certain financial and medical powers are the most typical method for dealing with incapacity. Advanced health care directives (living wills) cover the emotional and sometimes controversial issues of life support and feeding tubes when it has been determined that the individual will not recover from his or her condition.
These are just a few of the more common ways that individuals use to structure their estate plans. Individuals need to take inventory and determine whether they need to update their estate plans. After all, isn’t your estate plan more important than cleaning out a closet.
Editor’s Note: Melanie B. Bradford is an attorney located in Scottsboro, Alabama at 803 Garland Ferry Road at the intersection of Veterans Drive and Garland Ferry near The Daily Sentinel. Her phone number is 256-259-3301. The Alabama State Bar requires any communication that may be interpreted as an ad to state: “No representation is made about the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.”