FAQ
Answers to some of the more common questions regarding estate planning are found here:
A: A Will disposes of all of your probate property; a Trust may also be used, like a Will to dispose of property, but only that property that is in the Trust. A Will is not effective until death; a Trust may be given effect during life or at death. A Will may include provsions for a Trust to be created upon death or to provide that upon death certain property will be transferred into a Trust to be administered and distributed in accordance with the Trust. A Will is administered by the Personal Representative (Executor) and administration of the probate estate is accomplished within a usually brief period; a Trust may be operated for a brief period, or over the period of many years, or perhaps the lifetime of a beneficiary.
A: Perhaps the simplest way to explain the difference is that probate property will pass through the hands of the Personal Representative but nonprobate property does not. For example a life insurance policy usually pays benefits directly to the beneficiaries, without first being paid to the Personal Representative and then distributed from the estate. The same is often true for retirement plan benefits. Property owned in joint tenancy passes to the surviving owner without any action on the part of the Personal Representative. These are all examples nonprobate property. A bank account or real estate held solely in the name of the decedent is often probate property, and will be distributed by the Personal Representative in accordance with the decedent’s Will.
A: A Personal Representative (sometimes referred to as an Executor) is responsible for administering the estate of a decedent, whether the decedent died with a valid Will or without a Will. A Trustee is responsible for administering a Trust. An Agent is given power to act on behalf of a person (referred to as the Principal), usually under the terms of a Power of Attorney. An Agent has authority to act only while the Principal is alive. A Personal Representative has authority to act only after a decedent's death. A Trustee may have power to act while the Trustor (the person who creates the trust) is alive, or only after the Trustor's death, or both while the Trustor is alive and after the Trustor's death, depending on the terms fo the trust.
A: Some Trusts are used for some of the same things for which Wills are used. For example, a Trust may be used to divide a decedent's property and distribute it to the decedent's intended beneficiaries. Even when a Trust is used in this manner, a Will is usually appropriate if only to specify that any probate property is to be put into the Trust for distribution and administration. A Will is also appropriate when someone wishes to designate a guardian for minor children. Moreover, sometimes a Will is necesssary in order to exercise certain powers the decedent may possess (such as a testamentary power of appointment).
A: The term "estate" seems to conjure up images of mansions sitting on expansive grounds. Actually, one of the most important goups needing estate planning are parents of minor children, even if the parents don't have any financial assets. The parents still need to designate who should serve as the guadians of their children. Some have sufficient financial assets to need to be concerned about estate taxes. They need planning that will minimize any taxes. Others may have significant financial assets but not so much that estate taxes would apply. For them, taxes are not a concern, but they still want to provide an orderly means of passing on their assets, and they may want to make certain that their children or other beneficiaries are not handed control of assets they are not yet capable of responsibly administering. Each of these categories has a need for estate planning.
A: A durable Power of Attorney can in some circumstances be an alternative to a guardianship or conservatorship. A Living Will might be used to declare your desires regarding the use of life support if ever you were to have a terminal condition and could not at that ime make your desires known. A Health Care Power of Attorney can be used to designate an agent to make health care decisions on your behalf.