Within your lifetime you will accrue a wide variety of assets. The best way to determine what happens to those assets is by creation of wills and trusts. These assets can include: property, land, company shares, businesses, cash, bank accounts, artwork, jewelry, cars and all other possessions.
However, what happens to your assets after you die?
Simply put, that is completely up to you; they are your assets and you decide who gets them upon your death. This is where a will comes in.
A will is a simple document that outlines what your assets are and whom you want them to go to. This is a legal document, which will be used in probate after your passing to ensure that your assets go to the rightful beneficiaries. Anybody over the age of eighteen can write a will so long as they are of sound mind. A will must also be witnessed by people who are not beneficiaries of the will, in any way. State law will determine how many witnesses you need.
Many people never get around to making a will, and when they die the courts then distribute assets according to state laws. Normally an executor is appointed, and this person will deal with the disbursement of assets under the supervision of the probate court. If there is no executor, the probate court will appoint an estate administrator to deal with the distribution of assets. If on the other hand, you have no beneficiaries or relatives and have not made a will, it is possible that all of your assets will be claimed by the state.
When you make a will you will need to list all of your assets and outstanding debts. All of the outstanding debts listed in your will are paid off upon your death, and remaining assets are distributed in accordance to your wishes. Next, you should make a list of all beneficiaries, and decide who should receive what. When doing so, remember to list your beneficiaries by full name and relationship to avoid any confusion. If there are any items not specifically listed on your will, they will be distributed by the courts in accordance to state laws. If you do not wish for this to happen, you should include a clause that leaves the remainder of your estate to a specific person of your choice.
Assets that have contractual beneficiaries, such as a house with a joint mortgage or a joint bank account, are not addressed in the will as they already have a beneficiary, the joint owner. However, as mentioned above, all other assets should be listed in your will.
Should any circumstances in your life change, such as the birth of a child or grandchild or the acquisition of new assets, you may wish to change your will. It is important that you ensure that your current will is destroyed once you have created a new will and have had it witnessed. Your will is a document that will be of paramount importance after your death, particularly if you have a lot of material assets. It is therefore important that you keep it in a safe place, and let trusted family members and your lawyer know where it can be found.
It is also important to create a living will, otherwise known as an Advance Health Care Directive (AHCD). Listed below, are the top 10 things you need to know about a living will. . .
- A living will is a legal document that declares your wishes regarding the use of life-sustaining treatment should you become incapacitated from a terminal illness or a persistent/permanent vegetative state.
- A living will, in most cases, only becomes effective when you are permanently unconscious or terminally ill and unable to communicate your wishes regarding life-sustaining treatment.
- A living will cannot be revoked by anybody but you, and you can change it anytime while you have mental-competency/capacity.
- Most states have laws providing that a living will’s directives may not be followed if you are pregnant.
- A living will authorizes doctors to follow the instructions contained in the document once a determination of incapacity is made.
- Each state has specific laws dictating how a living will is to be executed. Most states provide that any competent person eighteen years of age or older can make a living will by signing it in front of two or more witnesses (who also sign the document attesting that the document was signed in their presence). Usually the witnesses cannot be related to you, and they should not be beneficiaries of your estate or have financial responsibilities for your medical care.
- A living will generally only avoids treatment when it is determined that recovery is hopeless and any treatment would only prolong the dying process. Your doctor must first determine if your prognosis fits those criteria before your living will has any effect on medical decisions.
- Because it is difficult to anticipate every medical condition you may face, it is often a good idea to designate an agent to act as a substitute healthcare decision-maker for you. A Health Care Power of Attorney is a document that designates an agent to make healthcare decisions for an individual. It is different from a living will in that a living will does not appoint anyone to make medical decisions for you. A living will is only a partial safety net in the event there is nobody to assume the duties of making medical decisions on your behalf under your Health Care Power of Attorney.
- Many states have laws that protect healthcare providers when they use good faith in following stipulations in a valid living will. Some statutes impose criminal penalties on those who act in bad faith.
- A living will is a simple form that may be purchased in most office supply stores. Nevertheless, as part of developing an overall estate plan, you should have your attorney review this document. Failing to properly execute a living will means that it will not be recognized and your wishes will not be carried out.
A trust is a fiduciary agreement that is generally created to protect your assets and/or minimize liabilities. There are many variations of trusts many of which usually avoid the probate process which can allow beneficiaries quicker access to your assets, save money on court fees, etc. The type of trust that is best for you and your assets will be determined by your specific needs and concerns.
DISCLAIMER: This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.
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