Estate planning is not something that people like to think about it. They may not want to think about dying or they may find the process intimidating and confusing. But creating an estate plan helps you prepare for the future and puts you in control. It can also help your family avoid stress and legal problems after you are gone.
What’s in an estate plan? Basically, it’s a series of legal documents that give instructions for what happens if you die or become incapacitated. An experienced lawyer can talk to you about your long-term goals and help you create an estate plan that meets your needs.
Here are three documents that may be important parts of a comprehensive estate plan:
A trust is a legally binding contract that arranges for the transfer of your assets after you die. Examples of assets that can be transferred in a trust include bank accounts, investments, life insurance policies, real estate, businesses or business property, and personal property. A third party is named trustee and is responsible for maintaining the trust and distributing assets at the appropriate time.
There are several advantages to using a trust. You decide who your beneficiaries will be and how your assets will be distributed. Your family will not have to go through the probate process, which can save them time, money, and a lot of stress.
There are many different types of trusts to choose from to help you achieve your long-term goals. They include:
- Revocable Trusts
- Irrevocable Trusts
- Bypass Trusts
- Family Trusts
- Generation-Skipping Trusts
- Testamentary Trusts
An experienced estate planning attorney can help you determine which types of trusts work best for your situation.
Transfer on Death Deeds
These documents allow you to transfer property to a beneficiary of your choosing after you die. A Transfer on Death Deed (TODD) can be used for any type of property including houses, buildings, and land. If you jointly own property, your interest would be transferred.
The property is transferred after a beneficiary files an Affidavit of Death in the deed records. This provides a clear title to the property. After you die, your beneficiary becomes responsible for mortgage payments, taxes, and other expenses, as well as any liens on the property.
There are several advantages to TODDs:
- You remain the owner of the property during your lifetime. That means you can renovate it, rent it out, or use it as collateral for a loan.
- You can name anyone you choose as a beneficiary, and you can choose more than one person.
- The property does not have to go through probate.
Power of attorney
This document gives another person the legal authority to make certain types of decisions for you. These decisions may be very broad or more limited in scope. The power of attorney can be temporary or permanent. It may go into effect immediately or only if you are declared incapacitated by a doctor or other medical professional.
There are different types, including:
- Durable power of attorney – You name someone as an agent to make financial decisions on your behalf. This typically includes the broad authority to pay bills, access bank accounts, file taxes, make investments, buy and sell property, and transfer property to a trust. But agents can also be given powers that are more narrow.
- Health care power of attorney – You name someone as an agent to make health care decisions on your behalf if you become incapacitated. This can include the broad authority to refuse or consent to medical treatment, choose doctors and medical facilities, and also grants access to your medical records.
It's never too early to start planning your legacy
Attorney Yuka Hongo of Hongo Law Office, LLLC helps clients in Hawaii and Japan create comprehensive estate plans that meet their needs and help give them peace of mind. She helps clients overcome language and cultural barriers to prepare for the future. Contact us to schedule a consultation.