When it comes to making major life decisions on health care, distribution of your assets and the proper naming of beneficiaries – procrastination comes easily. Sadness and fear are natural human emotions, which can interfere with important discussions and decisions concerning a Last Will & Testament, Living Wills and Living Trusts. Unfortunately, failing to tackle these issues can leave loved ones, family members, or even court appointed individuals struggling to make key decisions concerning your health or assets. Completing a Will (and/or Living Trust), Living Will and Power of Attorney can provide a framework around which these decisions can be made.
Often confused and misunderstood, living wills, last wills, living trusts and powers of attorney are important estate planning tools. Each serves a unique and vital purpose, below are a few key points about each:
Last Will – A Last Will designates beneficiaries of your estate, provides details on your last and can guardians for minor children. Finalizing a Last Will ensures that your last wishes are carried
out to your specifications. Without a Last Will family members, loved ones, and even the court system can be forced to make these critical decisions for you.
- A Last Will becomes effective upon your death.
- A Last will is submitted to probate court upon your death.
- A last will does not expire, but it can be updated or changed at any time.
An important point to consider when reviewing your assets and determining how they will be allocated at your death is whether the assets are benefits from an insurance policy, annuity, 401k, retirement or pension plan or some other asset with a beneficiary designation. If an asset has a beneficiary designation, then the written beneficiary designation controls the distribution of the assets at death, not your Last Will. These assets are not part of the “probate estate”. Many people do not understand this point and think that by naming individuals in a Last Will and granting them a percentage of their estate, they are distributing these assets. The Last Will does not distribute assets with a beneficiary designation.
Living Will – Living Wills guide your family and friends when making decisions regarding your when you are unable to make those decisions. Thinking about your end of life wishes can be
overwhelming and scary. People often know their preferences for end of life decisions and may even convey these feelings to loved ones, but never create a Living Will. Living wills are vital to ensure that your preferences are clear when making major decisions concerning artificial respiration, ventilation, do not resuscitate orders and other life support determinations are respected and followed.
- A Living Will provides guidance on your medical care when you cannot due to incapacity.
- A Living Will does not go through probate court and does not involve a judge.
- A Living Will does not expire, but it can be updated or changed at any time.
- If you have not done a Living Will, a Guardian may need to be appointed if you are unable to make decisions regarding your medical care.
Living Trust – The job of a Living Trust is to transfer property to designated beneficiaries. A key difference from a Last Will is that assets transferred pursuant to the terms of a Living Trust are not subject to probate. Clients may wish to avoid probate, because documents filed in court are public records. Many view the probate process as time-consuming and burdensome, but in reality, in most instances probate does not unnecessarily delay administration of an estate. In fact, in many situations, individuals who have prepared Living Wills fail to transfer all their assets into the Living Trust. When this occurs, the assets outside the Living Will must still go through the probate court.
- A Living Trust goes into effect once documents are executed and the trust is funded.
- Assets owned by a Living Trust do not go through probate court.
- However, assets outside the Trust must still go through probate court
- A Living Trust does not expire; it can be updated or changed (i.e. it is revocable) at any time.
Power of Attorney – In a Power of Attorney you grant powers to another individual, or entity, to make decisions on your behalf. The decisions typically involve financial matters and your assets. Decisions regarding your health or well-being are covered by a Living Will or Advanced Health Care Directive. Powers of Attorney can become effective upon signing, which is known as a Durable Power of Attorney. This means the powers granted in the Power of Attorney are effective immediately. Typically, these powers are wide-ranging. Alternatively, a Power of Attorney can become effective upon your suffering a disability of some kind, sometimes called a “Springing Power of Attorney”, i.e. it “springs” into effect when you suffer a disability. While these might be viewed as a safer alternative, a Springing Power of Attorney is less practical. If the person appointed to make decisions for you, the attorney-in-fact or agent, attempts to use the Power of Attorney, the bank or financial institution will want some proof that you are disabled. Thus, the agent must gather affidavits from physicians confirming your disability. These documents will no doubt have to be viewed by a lawyer for the financial institution. This slows down and complicates acting on someone’s behalf at a time when moving swiftly may be important.
Living Wills and Trust Attorney Located in Down Town Red Bank NJ
Byrnes O’Hern & Heugle has helped countless NJ residents create and setup valuable estate planning tools such as living wills, last wills and living trusts. When it comes to matters of estate planning law we have a proven track record of ensuring our clients wishes are recorded and carried out. If you would like to speak to an attorney from Byrnes O’Hern & Heugle about any issues regarding estate planning feel free to contact us. Call our Red Bank New Jersey office today at 732.219.7711 to schedule a free consultation.