Do the Pieces of Your Estate Plan Fit Together?

Senior Thursday

Do the Pieces of Your Estate Plan Fit Together? 

by Patricia Deemer

If your estate plan documents are older than 2007 or 2008, you may want to review them yourself and consider having an attorney review them.  The four "basic" document components of a basic estate plan are a will, a durable power of attorney for property, a power of attorney for health care, and a revocable trust.  There are state law rules governing the execution (or signing) of each of these documents that must be observed.

A will disposes of your real and personal property and takes effect only after your death.  You may change it as long as you are competent. Your will may have other provisions, including naming guardians for your minor children or burial instructions. If you have a revocable trust, your will generally 'pours over' into your trust any property not specifically disposed of by your will.

A trust is a legal entity created by a Grantor for the benefit of designated beneficiaries under the laws of your state and a valid trust document.  A Revocable Trust can be changed or completely revoked by the grantor at any time during the Grantor's lifetime as long as the grantor is competent to do so.  A trust must have a trustee.  Often, the Grantor is the initial Trustee of the trust, and the primary beneficiary.  The Trustee holds the legal title to the property for the benefit of the beneficiaries of the trust.  The property held in the name of the trust is known as the trust corpus or trust estate.  The Trustee is a fiduciary, and thus, is held to a high standard of conduct and responsibility to the grantor and the beneficiaries.  The terms of the trust are directions from the Grantor to the Trustee; the trustee is obligated to follow the terms of the trust.  A revocable trust typically provides for Successor Trustees who continue to follow the Grantor's directions after the Grantor is either deceased or no longer able (or willing) to manage his or her trust.  For example, if the Grantor becomes unable to manage his or her own affairs during life, a successor trustee may take over without the need for a court proceeding to appoint a guardian.  A trust continues to exist after the Grantor's death.

A Power of Attorney for Property names an agent, a person who can make financial decisions for you if cannot make them for yourself, without going to court.  Since 2007, an agent under a Power of Attorney for Property cannot take any actions with respect to an account titled in a Trust unless specific language referencing the Trust is included in the Power of Attorney for Property.  Thus, if your documents are older, they may not work together the way you originally intended.  Some people do intend that the agent under a Power of Attorney not have the ability to take actions with respect to their trust accounts, however, it is important that you understand whether or not your current documents still express your intentions.

A Power of Attorney for Health Care names an agent who can make medical decisions for you if you are unable to do so yourself.  This is a very important document that should be a part of every estate plan.

Do you understand how your documents work together? Do you understand them?  Many people are very surprised to learn what their wills or trusts actually say, particularly about how and when distributions are made to their children after their deaths.  A trust should be drafted to fit your particular family's needs and circumstances.

Patricia Deemer, of Deemer Law Firm, has been helping families with their legal needs for over 17 years.  Call her at 847-847-7463 to schedule an initial consultation.