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Estate Planning Tools Used with a Trust

Estate planning is vital for managing your assets, securing your legacy, and providing for the well-being of your loved ones after your passing. For many people, the core legal instrument in their estate plan is the trust. In addition to the trust, the use of several estate planning tools provide benefits. Those include power of attorney, pour-over wills, beneficiary and guardianship designations, advanced healthcare directives, and at a more advanced level for high net worth estates, family limited partnerships, family limited liability companies, qualified personal residence trusts, and generation-skipping trusts.

Role of a Trust

The trust plays a central role in an estate and serves to achieve several goals. Many estates can avoid the probate process with a trust, thus preserving estate assets and saving time. It provides for the management and distribution of assets for the grantor and beneficiaries. It sets forth the conditions that require the distribution of assets and to whom they go. A trust can increase the privacy of members of the household and the estate and serves to keep financial affairs confidential. It may allow for protection against creditors. Trusts can be very valuable in reducing tax liability. We discuss other benefits to trusts in conversations with our clients about their estate goals. Here are some legal instruments that will supplement your trust.

Advanced Healthcare Directives, or Living Wills

An advance healthcare directive, also known as a living will, is a legal document that lays out an individual’s preferences and instructions regarding medical treatment in the event they become unable to communicate or make decisions for themselves. It is an essential component of estate planning and is used to help healthcare providers and family members understand the individual’s wishes for end-of-life care. An advanced healthcare directive typically addresses specific medical treatments and procedures, such as life-sustaining measures, resuscitation, mechanical ventilation, tube feeding, and organ donation. This legal instrument allows individuals to express whether they want or do not want certain interventions.

Pour-over Will

A pour-over will is a legal document that is often used together with a revocable living trust as part of an estate plan. The main purpose of a pour-over will is to ensure that any assets not already transferred to the living trust during the person’s lifetime are “poured over” into the trust upon their death. The pour-over requires that any assets that have not been transferred to the living trust during the individual’s lifetime should be transferred into the trust upon their death. This includes assets that were unintentionally left out of the trust or acquired after the trust was established. This will not prevent assets from going through probate but will allow them to be distributed like other trust assets. This type of will appoints executors who are responsible for handling the probate process and appoints successor trustees who will take over the administration of the living trust after the person’s death.

Beneficiary Designations

Beneficiary designations help ensure that assets pass directly to intended recipients without going through probate. As you may have guessed by now, we really do not want your assets to have to go through probate, and this is another way to forestall probate. Designating beneficiaries is the process of specifying individuals or organizations that will receive the proceeds of certain assets upon the account holder’s or policyholder’s death. These designations are commonly used in bank and insurance accounts and are a simple but vital aspect of estate planning. They are also used with annuities, real estate, and brokerage accounts.

Guardianship Designations

Guardianship designations entail the appointment of a legal guardian for minor children or incapacitated adults in the event that their parents or legal guardians are unable to care for them. This designation is part of estate planning for families with offspring or where adults are in danger of or have lost legal capacity. These designations are typically placed in legal documents such as wills or stand-alone guardianship designations.

Both beneficiary and guardianship designations should be regularly reviewed and updated to ensure that they reflect one’s current wishes and life circumstances. Life events such as marriage, divorce, birth, or death may necessitate changes to them. It is often helpful to consult with an attorney when making or updating beneficiary or guardianship designations to ensure they align with the overall estate planning goals and legal requirements.

Power of Attorney

A power of attorney is a legal document that grants one person, the agent or attorney-in-fact, the authority to act on behalf of another person, the principal, in financial, legal, or other matters. Depending on the authority granted, various procedures are required for the power of attorney to be valid. For example, it is sometimes necessary to have adult witnesses. Similar to an advanced healthcare directive, a power of attorney allows someone that you appoint to take care of things on your behalf if you are legally unable to. The main difference is that it isn’t limited to healthcare decisions and can comprehensively cover all aspects of your estate.

Ensure Your Wishes Are Carried Out

Estate planning is a critical step for anyone who wants to ensure their wishes are carried out, and their estate is distributed as they envision. Utilizing estate planning tools is crucial to ensuring your wishes are carried out and your estate is distributed as you envision. Our team of experienced legal experts is ready to offer guidance to secure your wealth, improve your overall welfare, direct assets to your selected heirs, and minimize potential risks and costs. We are prepared to address any questions, provide reliable legal advice, assess your estate planning, and handle essential tasks to help you progress.

Contact the dedicated team of attorneys at Lowthorp Richards for trusted guidance on estate planning, trusts, and other tools by dialing (805) 981-8555 or completing our convenient online contact form. Our legal practitioners are deeply rooted in the California Tri-Counties region, serving Ventura, Santa Barbara, and San Luis Obispo.

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Cristian R. Arrieta, Lowthorp Richards McMillan Miller & Templeman, A Professional Corporation, 300 E. Esplanade Drive Suite 850, Oxnard, CA 93036