Estate Planning

What are some estate planning tools I should be aware of?

For starters, there are wills and trusts. Wills allow you to determine how you would like your property to be distributed, they also allow you to appoint guardians for minor children. While wills are completely optional, one should have one because otherwise the courts will have power over how property is distributed and who will be your children’s guardian. One more thing to keep in mind is that property distributed through a will is subject to probate—they may require time to be considered valid—which can be a time consuming and costly process.

Trusts, on the other hand are actual legal entities. Like a will, a trust can be customized to determine the distribution of an estate with the bonus of avoiding probate because it is a legal document. However, they do incur upfront costs and ongoing fees. You should also know that a trust exists in a complex web of rules and regulations. For your benefit, please consider seeing an experienced estate planning professional before getting a trust.

In the event that you become incapacitated—or unable to speak for yourself—you should also have a durable power of attorney. A durable power of attorney is a legal agreement that avoids the need for a judge to decide who should be responsible to make legal and financial decisions for you. Unlike the standard power of attorney, durable powers remain valid if you become incapacitated.

Much like the power of attorney, the health-care proxy is a document used to designate a trustworthy person with making health care decisions on your behalf if you become incapacitated. Such decisions can include: choosing a hospital, medical treatments, and authorizing surgeries.

These are common and very useful options, you can learn about even more options on our article on our website here.

What is a living trust?

A trust is a legal arrangement you can make to control what happens to your estate upon your death. When you set up a trust, you transfer the ownership of all the assets you would like in the trust from yourself, to the trust. As a result, you no longer own any of the assets in the trust, the trust itself does. But, as the trustee, you have complete control of the trust: you may buy or sell as you please and even give assets away.

An advantage to a living trust is no probate, which saves money and time. Shortly after your death, according to the trust, your assets will be distributed to your heirs.

For more information about living trusts, feel free to call our office or click here.

What is joint ownership?

Another way to distribute your estate is through jointly held property — specifically, joint tenancy with rights of survivorship. When you hold property this way, it will pass to the surviving co-owners automatically, “by operation of law.” Because title passes automatically, there is no need for probate.

If you happen to have more questions about estate planning, living trusts, or joint ownership, we would be more than happy to assist you in finding answers at Federal National Funding. For more information about estate planning please call our office at 201-342-3300. One of our associates will be happy to speak with you.