Advantages of Various Estate Planning Tools and Forms

Although no one likes to think about falling ill or passing away, it's essential to plan for it. Preparing these legal documents lets you make sure your money and property go to the people you want them to.

It's also important to let your loved ones know your wishes if you are ever unable to communicate your wishes. The estate planning process is the way to plan for death or incapacitation.

Overview of Forms and Tools

Estate planning documents involve deciding what to do with your assets and finances and making health care and end-of-life decisions for yourself. You can explain who you want to pass items, called beneficiary designations, which typically go to loved ones or minor children.

It helps if you have various forms and tools to help you with estate planning. In this article, you can find overviews of various estate planning tools, such as:

  • Last will and testament: what to do with possessions, real estate, property, and money
  • Living will / Health care directive: your health and end-of-life choices
  • Health care power of attorney: choose someone to make health care choices for you if you can't
  • Financial power of attorney: choose someone to pay bills and make financial choices for you if you can't

You may also want to read a helpful estate planning checklist and a questionnaire. These tools can help prepare you to meet with an estate planning attorney or prepare DIY forms online.

Contents of a Basic Will

There are some basic elements that pretty much every will contains. A will should begin by making it clear that it's meant to be a will. It needs to include the full name and residence of the testator (the person who is making the will). It's also always good to have a statement revoking any previous wills.

The will should include whom you would like to leave your money and property, such as family members. If you would like to leave specific belongings or money to various people, you can list these wishes in the will.

If, on the contrary, you simply want to leave everything to one person, you could make a general statement conveying that information. Having a will provides peace of mind that loved ones will follow your wishes.

Naming Your Will's Personal Representative

A will should also designate an executor or personal representative to handle the estate administration.

It's usually a good idea to include an alternative executor. This is essential if the original executor can't or won't take responsibility for being the executor.

Finally, the testator must sign and date the will. While these are the basic elements of a will, it's important to check the laws of your state to find out the requirements for drafting a will in your state. You can also use a DIY online process specific to your state to see accurate requirements.

Contents of Basic Living Wills or Health Care Directives

All of the states in the U.S. have laws concerning the ability of people to make decisions about their medical care before there is a need for treatment.

A living will or advanced directive is a document that allows people to explain the type and duration of medical care they would like to receive if they are in a situation where they can't communicate those wishes.

Each state has its own laws regarding what can be included in a living will, so it's essential to check the laws in your jurisdiction or consult with an attorney when drafting a living will.

Health and Financial Powers of Attorney

It's worth mentioning that a living will and a health care power of attorney concern similar matters but are very different. As previously mentioned, a living will explains the person's wishes if they can't communicate the wishes themself.

On the other hand, a power of attorney designates a person to have the legal ability to make financial or medical decisions on a person's behalf. A power of attorney is only valid if the person who makes the document cannot make decisions for themself.

A health care power of attorney may have many of the same questions or information as a living will or health care directive, but they are not the same.

Table of Common Estate Planning Tools

There are a lot of estate planning tools available to you. The following table summarizes the benefits provided by some of the more common estate planning techniques. Talk to your estate planning attorney if you are still unsure what kind of forms you need.

The Benefit of the Planning Tool No Will Basic Will Pour-Over Will Living Trust AB Trust QTIP Trust
Permits you to select the beneficiaries of your estate No Yes Yes Yes Yes Yes
Permits you to select the executor of your will No Yes Yes Yes Yes Yes
Permits you to select the trustees of your trust No No Yes Yes Yes Yes
Permits you to select the guardians for your children No Yes Yes Yes Yes Yes
Avoids the time-consuming and expensive probate process No No No Yes Yes Yes
Timing of Distributions            
Permits distribution of assets to children other than simply upon reaching the age of majority (Ex. 1/3 at age 25, 1/3 at age 30, 1/3 at age 35) No No Yes Yes Yes Yes
Prevents conservatorship of estate owner No No No Yes Yes Yes
Protects assets from creditors No No No Yes Yes Yes
Estate Taxes            
Assists married couples in reducing estate taxes No No Possibly, if properly designed to save estate taxes No Yes Yes

Allows the first spouse to die to name the ultimate beneficiaries of their estate while still permitting the surviving spouse to utilize the assets and still deferring estate taxes







Common Definitions: Estate Planning Terms To Know

Intestate means you have no will, and your estate passes to your heirs based on your state's laws of descent and distribution.

Testate means you have a will, and your estate passes to your heirs based on beneficiary designations in the will.

Basic Will means you have a will that distributes everything to your spouse, if living, otherwise to your children when they reach the age of majority.

Pour-over Will means you have a will that distributes everything to a trust.

Living Trust means a trust designed to avoid probate and provide asset management. A basic living trust does not effectively use both spouses' $675,000 unified credits. Remember, each person is entitled to have the first $675,000 of their estate passed to their heirs without estate taxes. This is referred to as the "unified credit." Because of this deficiency of a basic living trust, an A.B. Trust is often recommended instead to married couples with substantial assets.

A.B. Trust means a trust designed to make sure the $675,000 unified credit of each spouse is used to the full extent possible while allowing the surviving spouse to use the assets of the deceased spouse during the remainder of the surviving spouse's lifetime.

QTIP Trust means a trust designed to permit a spouse to transfer assets to their trust while maintaining control over the ultimate disposition of those assets at the spouse's death. QTIP Trusts are particularly popular when a person is married for a second time but has children from a first marriage for whom they want to reserve assets.

Hiring an Estate Planning Attorney

Wills can be pretty easy to draft if a person doesn't have many assets. You can use a simple online process to DIY your forms from home.

However, if you have a lot of assets or a complex situation, you should probably hire an estate planning attorney to help you with your will.

Regardless of the size of your estate, if you have questions or concerns about estate planning, you might want to consult with an attorney.

Can I Solve This on My Own or Do I Need an Attorney?

  • DIY is possible in some simple cases
  • Complex estate planning situations usually require a lawyer
  • A lawyer can reduce the chances of a family dispute
  • You can always have an attorney review your forms

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