WILLS VS. TRUSTS VS. POAS
How do these estate planning and protection tools work to help? How do they differ?
Legal documents are among the most important tools for effective estate planning. Without the right ones in place efforts to build and maintain wealth, and to pass along assets and income to heirs can be greatly hampered. So, what are the bare minimum vehicles and structures which individuals and families need in order to properly and effectively preserve and growth wealth, and optimize succession plans?
Wills are one of the most basic, core documents everyone should have. Without it you can almost guarantee that passing along assets is going to be more expensive, less reliable, and more emotionally stressful, than if you have one done well.
A Last Will and Testament dictates the wishes of the benefactor in how they wish their estate, real estate and other property and assets to be distributed after they pass on. This can be very simple depending on how much you have, and the complexity of how assets are held. What’s important is that you have one made as soon as possible. Adjustments can always be made over time.
Note that it is important to consult an attorney to understand the limitations of what you can do in a will according to local laws, and what will ensure it is legal and enforceable.
There are many types of trusts and variations of them. A trust is a highly desirable addition to a will for many reasons. A will alone can mean public and outside meddling in an estate, and involving courts and judges. There can be high costs of third party control of assets and conservatorship. A properly structured trust can help avoid this, avoid the lengthy probate process which can leave heirs in the lurch, and protect flexibility and confidentiality.
Note that having good corporate and legal business structures for holding other assets, ventures, and real estate can also be important for streamlined succession, reducing taxes, and ensuring efficiency and optimizing what is transferred.
Durable Powers of Attorney
Many of the above solutions work for when you pass away. We all will one day. However, it is far more common for people to be injured, incapacitated, or declared incompetent. This is often precursor to passing away, but may be temporary or last years. Without clear Powers of Attorney, assets, businesses, and other personal property, and medical decisions can be mismanaged, wind up in the courts, be made difficult in being made public, and can generally cause a lot of stress and unnecessary loss. With as complicated as our judicial and healthcare system is today, it is vital to have clean and clear lines of authority for decision making in these situations. This should not only cover the head of the household, but other family members who may hold title to assets, businesses, and bank accounts as well.
Make sure you are well covered by all of these tools as soon as possible.