Important Medical And Financial Choices
Don’t forget — there are more aspects to estate planning than just signing a will. Medical, current financial, and other decisions play an important role also.
The differences between the similar sounding living will and living Trust often cause confusion. The first is for medical purposes; the other is for financial needs.
A living will provides authority for certain last medical measures when in a terminal condition and has nothing to do with transferring assets or property after death.
A living (or revocable) trust is a financial method that provides for the after-death transfer of ownership of trust assets much like a will does, as well as allowing lifetime and after-death control of the trust’s assets by a professional manager when appropriate.
If you create a living trust for the transfer of your assets, you should also have a will to transfer any assets not in the trust’s name to the living trust for distribution.
Other important estate planning documents are powers of attorney. These documents deal with the authority given to others to make medical and financial decisions under the specific conditions stated in them. The documents will assure that someone will always have the power to act on your behalf, which can prevent having to go into court to secure such authority at a crucial time.
It is important, while you are doing your estate planning, to check on the beneficiary that you have chosen for your life insurance and retirement funds. Neither will be controlled by your will unless your estate is the beneficiary, which is not always the most financially appropriate choice to make. For example, naming your estate as the beneficiary of your retirement funds can lead to more income taxes being owed because of the short payout period when an estate receives such funds. Extra income taxes to be paid by your estate may not be what you had in mind.
While a will controls major aspects of one’s estate, it’s not the only document that can protect your property and your well-being.