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5 Estate Planning Tools And What They Do

Jun 21, 2024 | Estate Planning

Every day, people fall victim to the misconception that estate planning is only for the rich and the elderly. This simply is not true. It’s actually for any person who owns something of value or has minor children or dependents they care for.

Estate planning is an umbrella term that covers a wide variety of documents that can be used to safeguard your assets and protect your loved ones in the event that you become incapacitated or pass away suddenly. The fact of the matter is that tomorrow isn’t guaranteed, so planning while you still have the ability to is crucial!

This blog will outline five different estate planning tools and what they can do for you. Let’s dive in!

1. Wills

A will is what many people tend to think of when they hear the term “estate planning.” The goal of a traditional will is to specify your end-of-life wishes in case you suddenly become incapacitated or pass away. More specifically, it allows you to designate a beneficiary or beneficiaries who will inherit your assets, as well as name a guardian for any minor children.

A traditional will is just one of many kinds of estate planning tools, but there are several other types of wills that serve various purposes and provide an additional layer of security to your assets. Two other commonly used will types include:

  • Joint will: Shared by two people, usually a married couple, that specifies that all the couple’s property will be left to the surviving spouse in the event that the other passes away.
  • Pour-over will: Ensures an individual’s remaining assets will automatically transfer to a previously established trust upon their death.

A wills attorney can explain your available options and advise you on which type of will might work best for you. 

2. Revocable Living Trust

Trusts are another estate planning tool that can provide greater protection and control over your assets. Unlike a will, a revocable living trust can help manage your assets now, during your lifetime, as well as efficiently distribute them after you pass away. A revocable living trust is created by you, the grantor, for the benefit of beneficiaries that you name.

You’ll also name a trustee, someone who oversees the trust. You can name yourself as the trustee if you wish, but you’ll need to designate a backup to manage the trust after you pass. Many people think that a will is all they need, but a revocable living trust is actually what will prevent your loved ones from having to undergo the stressful process of probate.

3. Durable Power Of Attorney

A durable power of attorney is a legal document that allows you to designate someone else to make important legal and financial decisions on your behalf in the event that you become incapacitated and can no longer do so.

4. Healthcare Power Of Attorney

A healthcare power of attorney is a legal document that allows an individual to give someone else the authority to make decisions about their medical care. It’s important to name someone you trust for this role, as they may be responsible for making critical healthcare decisions on your behalf if you become ill and are unable to make decisions for yourself.

5. Advance Healthcare Directive

An advance healthcare directive is an important estate planning tool that outlines your medical preferences in case you are too sick or unwell to make decisions for yourself. For example, an advance healthcare directive can include provisions for whether or not you wish to receive certain life-sustaining treatments, such as life support. By creating this essential document, you can specify your exact preferences, which can prevent confusion and disputes among your loved ones during an already difficult time.

Questions About Estate Planning Tools You May Have

1. What’s the main difference between a will and trust?

The difference between a will and a trust is that a will outlines the distribution of your assets to beneficiaries upon death or incapacitation, while a trust allows you to transfer your assets outside of your own name so that they can be managed by someone else (or yourself). Utilizing both documents is the best way to prevent gaps in your estate plan.

2. Can I DIY my estate plan instead of working with a lawyer?

While there are online estate planning tools that allow you to DIY your estate plan, this is not a process we recommend. The issue with DIY estate plans is that the templates are designed generically and may not account for Pennsylvania’s state specific laws, or your individual needs and goals. Additionally, these documents typically lack the language and requirements that make them legally compliant.

If you choose to forgo professional help and instead pursue a DIY estate plan, you might make costly mistakes that cause more headache and hassle for your family down the road, which is the last thing they need when they’re navigating a significant loss.

3. When should I start estate planning?

There is no required age for starting an estate plan, but if you’ve reached your golden years and don’t have any of the discussed legal documents in place, it’s important to plan now while you have the time. Otherwise, there are a few life events that signify it might be time to create an estate plan, including the following:

  • You started a savings account with significant funds.
  • You got married.
  • You got divorced.
  • You inherited money.
  • You had a child.
  • You have a new grandchild.
  • You purchased a home.

4. Once I create my estate plan, that’s it, right?

Wrong. Estate planning isn’t a “one-and-done” type of process. Why? Life changes! That’s why it’s recommended to update your estate plan every 3-5 years.

How Daly Law Offices Can Help You

At Daly Law Offices, our estate planning attorney, Joshua N. Daly, has 15+ years of experience helping clients take advantage of the legal tools at their disposal. He can explain your legal options, answer any questions you might have, and advise you on which estate planning tools can best meet your goals. Call Daly Law Offices today to schedule a free consultation and learn about your options.

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