What Are The Basic Items In An Estate Plan?
The first item in an estate plan is a Will. A Will creates an orderly disposition of the estate and determines who will inherit your estate, not the Court and the statutes of the State of Arizona. In a Will, the person making the Will, known as the Testator, determines who the personal representative or who the personal representatives of their estate will be. The personal representatives are people that the person making the Will trusts. Personal representatives might be family members, friends, or they could be an organization or a corporation. With Court oversight, the personal representative pays the bills of the estate and makes sure that the remaining portion of the estate is distributed according to the wishes of the person who made Will. One of the disadvantages of a Will is the probate process. Probate is required to ensure that the Will is valid, the bills are paid, creditor claims are addressed and the remaining assets, that are part of the Will, are distributed to the proper people. The Court is involved in the probate process every step of the way.
If necessary, individuals or couples can develop a Trust as part of their estate plan. A Trust does essentially the same thing a Will does. It creates an orderly disposition of the estate. The parties making the Trust place their assets (property) in the Trust and create a set of instructions for distribution of the assets to the proper people after their passing. Then, the person or people named as successor trustees ensure that the assets are distributed according to the Trust plan. One of the advantages of a Trust is that it avoids the probate process. Another advantage is that it’s not made public. A Will and the documents necessary for the probate process are available to the public in the courthouse where the probate documents are filed.
Powers of Attorney are other basic items necessary in an estate plan. Powers of Attorney are generally a Durable Financial Power of Attorney, to choose the person or people that will make financial decisions for the person making the Power of Attorney (known as the Principal) in the event that person is incapacitated or suffering from the effects of mental illness, dementia, etc., or a Healthcare Power of Attorney, to choose the person or people that will make healthcare decisions for the person making the Power of Attorney, in the event that person is incapacitated or suffering the effects of mental illness, dementia, etc. Powers of Attorney are necessary to avoid the expense, complications and loss of control that arise when a person becomes incapacitated and does not have Powers of Attorney in place. In the absence of Powers of Attorney, your family may have to spend thousands of dollars on an attorney to get Court orders that allow someone else to make financial and medical decisions for you.
Another item necessary in a basic estate plan is a Living Will. A Living Will authorizes medical personnel to withhold mechanical means of life support in the event that a person is in a coma that they will not recover from or if they are in what is known as a “persistent vegetative state.”
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