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The Documents Involved in an Estate Plan
THE DOCUMENTS INVOLVED IN AN ESTATE PLAN
By: Tony M. Abou Ezzi, Esq.
ESTATE
PLANNING:
Why create an Estate Plan? Ask yourself this: Do I know what tomorrow holds? An Estate Plan is an active step towards ensuring that no
matter what happens to you in the future, you are prepared with a series of
documents that set forth your wishes. An Estate Plan provides for your voice to
be heard no matter what happens to you in the future. Most of all, having a
plan and knowing what will happen to your estate allows you to focus on living
your life today and not worrying about what will happen tomorrow.
An Estate Plan consists of:
1. A Last Will and Testament (A
Will);
2. A Revocable Living Trust or
Irrevocable Trust (A Trust);
3. Power of Attorney for
Property;
4. Power of Attorney for Health
Care; and
5. A Living Will.
1. Last Will and Testament (A Will) – is
created to suit your specific needs and to indicate how you want your assets to
be distributed by an Executor when you pass away. Think of your Will as
demonstrating your wishes after you pass away; it is a way of preserving your
voice in the matter of who you want to receive certain property. If you have
tangible personal property and/or real property, you can give your property
away according to your wishes by creating a Will. If you want to give specific
assets or sums of money to your family or friends a Will allows this. Further,
if you have minor children (under 18 years old), your Will is the document that
allows you to appoint (name) a guardian for your child or children. A Will
becomes effective only upon your death; therefore you can revoke or amend your
Will at anytime up until your death.
a. Pour Over Will – A Pour-Over Will is a document that is
created with a Trust in order to catch assets that you forget to place in the
Trust. What this means is that any assets (items) that are not placed in the
name of your Trust, at the time of your passing, are treated as though you
intended to place them in your Trust. The terms of the Trust are then in
control of the disposition of all your assets.
2. Revocable Living Trust or Irrevocable Trust – A Trust is a legal
document that names a Trustee, the person in charge of the Trust, and
Beneficiaries, the persons who will benefit from the Trust. A Trust acts like a
Will, except that assets can be distributed without court supervision otherwise
known as the Probate process, which is the process of opening and closing an
Estate that is overseen by the court. Probating an estate is expensive,
frustrating, and time consuming. There are two categories of Trust:
a. Irrevocable Trust – As the name implies, this
Trust cannot be revoked and once created it lasts for the duration it takes to
distribute the assets in the Trust. This type of Trust typically does not allow
amendments to change its terms.
b. Revocable Living Trust - This type of Trust can be
revoked during your lifetime, amended and changed as you see fit. Upon your
death, a Revocable Living Trust becomes an Irrevocable Trust.
3. Power of Attorney for Property - allows you to name a
trusted Agent who agrees to act on your behalf as it relates to your financial
affairs (to pay bills, make investment decisions, receive retirement or
benefits checks, and sell or purchase property). You can choose the level of
decision-making authority that your Agent has to act on your behalf and it only
takes effect when you are incapacitated. It terminates upon your passing or
when you elect to revoke the Power of Attorney. Without a Power of Attorney for
Property, upon the occurrence of your incapacity a guardianship is required to
be established in order for your family member or loved one to make decisions
for you. In the Power of Attorney you can elect whom you would like to serve as
your guardian if the court determines one is needed. Guardianship takes time, it
costs a lot more and the court could appoint a guardian that you would not have
chosen.
4. Power of Attorney for Healthcare - allows you to name a
trusted Agent who agrees to act on your behalf as it relates to your medical
care and health care related decisions. During a medical emergency where you
cannot tell a doctor whether to proceed or not, this document takes effect and
permits doctors and nurses to respond quickly knowing that your Agent has legal
authority to make critical health care decisions. You can limit the level of
decision-making authority that your Agent has to act on your behalf and you can
select when the Power of Attorney will take effect and terminate. In the Power of Attorney you can elect
whom you would like to serve as your guardian if the court determines one is
needed. Guardianship takes time, it costs a lot more and the court could
appoint a guardian that you would not have chosen.
5.
Living Will – A Living Will provides instructions for an Agent you
designate as to whether you wish to receive certain life-sustaining treatment
when you have a terminable condition. In this document, you are telling the
Agent whether or not you wish to be permitted to die naturally. This becomes
effective upon signing, and is used only when you are incapacitated and cannot
make decisions and have a terminable condition as determined by your physician.
Tony M. Abou Ezzi, Esq. is an Estate Planning, Probate and Guardianship Attorney in Illinois and is the owner of Ezzi Law. He realizes that Estate Planning involves extremely difficult topics and decisions, but he supports his clients through the entire process and counsels them as though they are members of his own family. If you are interested in having Tony assist you with your Estate Plan, please feel free to reach out to him for a free consultation.
