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Hello, and welcome back to the Estate Planning Podcast presented by your friends with Rhodes Law Firm. I’m your host, Colby Kukelski and thank you for joining us back here this week. If you’re unfamiliar with us, the Estate Planning Podcast is focused on helping families just like yours figure out what estate planning is and what tools they may need to create the best plan for their family.
This week, we’re focusing our discussion on what types of estate planning tools are available to you. Now, typically, when people think of estate planning, they are overwhelmed thinking, you know, what type of documents do we need? How much is this going to cost. And I’m here to tell you what the tools are available to you and which ones you may need to help your family. After our discussion today, you will be very familiar with what types of tools are out there for you and so when you go to complete your estate plan, you’ll know exactly what you need, and what that document actually means to you.
I always like to start the conversation around probably the most well-known estate planning tool, which is a Will or Last Will and Testament. Now you’ve probably heard of the term Will before but you don’t know what that actually means. Well, a Will is a document that you have drawn up during a life that designates where your assets go upon your passing. Most people if they have a Will, will say that you know upon my passing, everything goes to my spouse, and if my spouse has pre deceased, then everything goes to the children. However, what most people fail to realize is that all Wills require probate. If you are using a Will, your Will must be probated at the time of your passing. We’re going to have a later discussion about what probate is and what it entails. But stick with me for now in knowing that if you are using a Will, that Will must be probated at the time of your passing. So in conclusion, regarding a Will it is a document you have drawn up during live, it does designate where your assets go upon your passing, but there is a little bit of work that will be required of your family should something happen to you.
The next type of estate planning tool that I want to discuss is something you may be unfamiliar with, which is a Trust. A Trust, I like to say is very similar to a Wil in that it is a document that is drawn up during life. It does designate where your assets go. However largest difference with a Trust is that it doesn’t require probate. The difference with a Trust is that you essentially activate it during life, meaning you become trustee, and there is a plan of if something should happen to you who the next trustee would be. So with a Trust, we can completely avoid having to go through the probate process and having to you know, do that work. If something should happen, your family won’t have to go to the court and complete the probate process. Now, there are many different types of Trusts, but for our conversation here, I’m really just going to focus on the probate avoidance aspect. Join us in later episodes where we’ll really get into the nitty gritty of the different types of Trusts that are out there, and how they may be beneficial to you. So in conclusion of our Trust discussion, our big takeaway is that a Trust is a document that you have drawn up during life. It does designate where your assets go upon your passing, however the biggest difference really from a Trust and a Will is that if properly used a Trust can completely avoid the probate process.
Now I’m going to talk about the documents that you probably have heard of during life, meaning Powers of Attorney. A lot of people ask, do you have a Power of Attorney? Do you have a living will and most people aren’t really sure what to say. So here’s where we’ll discuss the different types of Powers of Attorneys that are available to you and what purpose they may serve. The Durable Power of Attorney,
I like to call it a Financial Power of Attorney, is a document that you signed during life that designate someone to be able to help make decisions for you should you be unable to. This Durable Power of Attorney typically covers those day to day financial things that you may have, such as paying bills, filing taxes. This tool allows someone to complete these actions on your behalf, if you should be unavailable. So if you should be incompetent, you’ve appointed someone to handle these things for you. Now, I will say what most people fail to realize is that a Power of Attorney is durable, meaning it’s valid during the duration of your life. If you should pass away, that Power of Attorney is void at that point. There’s been many times where I’ve had children of clients come in when their parents have passed, and we’re talking about accessing bank accounts and, you know, closing accounts and they’re saying, well, I have my mom’s Power of Attorney. That’s where I have to explain to them that Power of Attorney is no longer valid, it was only valid during your mother’s life. Having a Power of Attorney is an essential tool to having an estate plan. So while it may not be invalid, once you’ve passed away, it serves a very important purpose for during your life. I always, always recommend that every single person over the age of 18 has a Power of Attorney in place, in discussing Powers of Attorney, the next one we’re going to talk about is a Health Care Power of Attorney.
A healthcare power of attorney sometimes called a living will or an advanced directive is a document that again, you sign during life that designates someone to make health care decisions on your behalf should you be unable to. Now I will tell you, each state has a little bit of a different type of health care power of attorney. Some states have these where you can make particular decisions regarding treatment preferences and some states have healthcare powers of attorneys that are just a little bit more discretionary. In any case is always important to have this in place. So someone has the legal authority to make those health decisions for you.
In conclusion, regarding our conversation about Powers of Attorneys, there really are two different types you should be focusing in on a Durable Power of Attorney and a Healthcare Power of Attorney. Both of these documents serve very important purposes for you during life. But also both of these documents are only valid while you’re alive. Again, anyone over the age of 18 should have these in place, and it allows someone to be able to make these financial and medical decisions on your behalf. So there you have it guys, a very brief overview of the different types of estate planning tools that are available to you. Now when considering what you want your estate plan to look like. We’ll also discuss what tools you need for that. Every estate plan needs those Powers of Attorneys, but not every estate plan needs a Will or Trust. So consider what your goals are for your family and what tools will best help get you there.
That’s all for this week. But Join us next week as we talk about what probate is, when it’s required and how it could impact your family.
