8/12/2019 Key Estate Planning Documents You Need
1/2
PTM Wealth Management, LLCPaul T. Murray, ChFC, CDFA350 North
Main Street
Suite 101Chalfont, PA 18914Office: 855-786-9584
Fax: [email protected]
www.ptmwealth.com
Key Estate PlanningDocuments You Need
January 30, 2014
There are five estate planning documents you mayneed, regardless
of your age, health, or wealth:
1. Durable power of attorney
2. Advanced medical directives
3. Will
4. Letter of instruction
5. Living trust
The last document, a living trust, isn't alwaysnecessary, but
it's included here because it's a vitalcomponent of many estate
plans.
Durable power of attorney
A durable power of attorney (DPOA) can help protect
your property in the event you become physicallyunable or
mentally incompetent to handle financialmatters. If no one is ready
to look after your financialaffairs when you can't, your property
may be wasted,abused, or lost.
A DPOA allows you to authorize someone else to acton your
behalf, so he or she can do things like payeveryday expenses,
collect benefits, watch over yourinvestments, and file taxes.
There are two types of DPOAs: (1) an immediateDPOA, which is
effective immediately (this may beappropriate, for example, if you
face a seriousoperation or illness), and (2) a springing DPOA,
whichis not effective unless you have become
incapacitated.Caution:A springing DPOA is not permitted in
somestates, so you'll want to check with an attorney.
Advanced medical directives
Advanced medical directives let others know whatmedical
treatment you would want, or allowssomeone to make medical
decisions for you, in theevent you can't express your wishes
yourself. If youdon't have an advanced medical directive,
medicalcare providers must prolong your life using artificialmeans,
if necessary. With today's technology,physicians can sustain you
for days and weeks (if not
months or even years).
There are three types of advanced medical directivesEach state
allows only a certain type (or types). Youmay find that one, two,
or all three types arenecessary to carry out all of your wishes for
medicaltreatment. (Just make sure all documents areconsistent.)
First, a living will allows you to approve or declinecertain
types of medical care, even if you will die as aresult of that
choice. In most states, living wills takeeffect only under certain
circumstances, such asterminal injury or illness. Generally, one
can be usedonly to decline medical treatment that "serves only
topostpone the moment of death." In those states that
do not allow living wills, you may still want to haveone to
serve as evidence of your wishes.
Second, a durable power of attorney for health care(known as a
health-care proxy in some states) allowsyou to appoint a
representative to make medicaldecisions for you. You decide how
much power yourrepresentative will or won't have.
Finally, a Do Not Resuscitate order (DNR) is adoctor's order
that tells medical personnel not toperform CPR if you go into
cardiac arrest. There aretwo types of DNRs. One is effective only
while youare hospitalized. The other is used while you areoutside
the hospital.
Will
A will is often said to be the cornerstone of any estateplan.
The main purpose of a will is to disburseproperty to heirs after
your death. If you don't leave awill, disbursements will be made
according to statelaw, which might not be what you would want.
There are two other equally important aspects of awill:
1. You can name the person (executor) who willmanage and settle
your estate. If you do not namesomeone, the court will appoint an
administrator,who might not be someone you would choose.
Benefits of a will:
Distributes propertyaccording to yourwishes
Names an executor tosettle your estate
Names a guardian forminor children
Page 1 of 2, see disclaimer on final page
8/12/2019 Key Estate Planning Documents You Need
2/2
Prepared by Broadridge Investor Communication Solutions, Inc.
Copyright 2014
he opinions voiced in this material are for general information
only and are not intended to provide specific advice or
recommendations for ndividual. To determine which investment(s) may
be appropriate for you, consult your financial advisor prior to
investing. All performanceeferenced is historical and is no
guarantee of future results. All indices are unmanaged and cannot
be invested into directly.
he information provided is not intended to be a substitute for
specific individualized tax planning or legal advice. We suggest
that you consuwith a qualified tax or legal advisor.
PL Financial Representatives offer access to Trust Services
through The Private Trust Company N.A., an affiliate of LPL
Financial.
2. You can name a legal guardian for minor childrenor dependents
with special needs. If you don'tappoint a guardian, the state will
appoint one foryou.
Keep in mind that a will is a legal document, and thecourts are
very reluctant to overturn any provisionswithin it. Therefore, it's
crucial that your will be wellwritten and articulated, and properly
executed underyour state's laws. It's also important to keep your
willup-to-date.
Letter of instruction
A letter of instruction (also called a testamentary letteror
side letter) is an informal, nonlegal document thatgenerally
accompanies your will and is used toexpress your personal thoughts
and directionsregarding what is in the will (or about other
things,such as your burial wishes or where to locate
otherdocuments). This can be the most helpful documentyou leave for
your family members and your executor.
Unlike your will, a letter of instruction remains
private.Therefore, it is an opportunity to say the things youwould
rather not make public.
A letter of instruction is not a substitute for a will.
Anydirections you include in the letter are onlysuggestions and are
not binding. The people to whomyou address the letter may follow or
disregard any
instructions.
Living trust
A living trust (also known as a revocable or inter vivostrust)
is a separate legal entity you create to ownproperty, such as your
home or investments. Thetrust is called a living trust because it's
meant tofunction while you're alive. You control the property inthe
trust, and, whenever you wish, you can changethe trust terms,
transfer property in and out of thetrust, or end the trust
altogether.
Not everyone needs a living trust, but it can be usedto
accomplish various purposes. The primary functionis typically to
avoid probate. This is possible becauseproperty in a living trust
is not included in the probate
estate.
Depending on your situation and your state's laws,the probate
process can be simple, easy, andinexpensive, or it can be
relatively complex, resultingin delay and expense. This may be the
case, forinstance, if you own property in more than one stateor in
a foreign country, or have heirs that liveoverseas.
Further, probate takes time, and your propertygenerally won't be
distributed until the process iscompleted. A small family allowance
is sometimespaid, but it may be insufficient to provide for a
family'songoing needs. Transferring property through a livingtrust
provides for a quicker, almost immediate transfeof property to
those who need it.Probate can also interfere with the management
ofproperty like a closely held business or stock portfolioAlthough
your executor is responsible for managingthe property until probate
is completed, he or she maynot have the expertise or authority to
make significantmanagement decisions, and the property may lose
value. Transferring the property with a living trust canresult
in a smoother transition in management.
Finally, avoiding probate may be desirable if you'reconcerned
about privacy. Probated documents (e.g.,will, inventory) become a
matter of public record.Generally, a trust document does not.
Caution:Although a living trust transfers property likea will,
you should still also have a will because thetrust will be unable
to accomplish certain things thatonly a will can, such as naming an
executor or aguardian for minor children.
Tip:There are other ways to avoid the probateprocess besides
creating a living trust, such as titlingproperty jointly.
Caution:Living trusts do not generally minimizeestate taxes or
protect property from future creditorsor ex-spouses.
Other benefits of a livingrust:
Gives someone thepower to manage yourproperty if you should
become incapacitatedLets a professionalmanage your propertyfor
you
May circumvent statelaws that limit yourability to give to
charity,or force you to leave acertain percentage ofyour property
to yourspouse
Page 2 of 2
