Understanding Documents to Make Estate Planning Less Confusing

Posted By Steven Adler || 20-Dec-2012

Long Island residents may be putting off estate planning decisions because of the many complexities involved. There are various types of trusts and wills. What is the difference between them? Here is some information that will hopefully make estate planning less confusing.

Many people have heard of a "will" and a "living will." A will is a document that identifies a person's wishes to be executed after death. A living will, on the other hand, discusses a person's health care wishes in the event that the individual becomes incapacitated and unable to make decisions on his or her own. The individual may appoint a power of attorney to carry out these wishes.

Another document is a living trust, also called a revocable trust. This allows the individual to hold assets while he or she is still alive. The document can be revoked or cancelled at any time before the person's death. When the person dies, a trustee handles the assets and ensures they are distributed according to the trust.

The difference between the two is that a living will is valid only for handling health care decisions, whereas a living trust can be used throughout one's life. A living trust works to preserve assets while a person is still alive. It is not used to assist with medical decisions, but a person can appoint a power of attorney to handle medical decisions.

A living will must be created when a person is mentally capable of doing so. Not everyone needs one, but it is a good document to have if a person has strong wishes regarding what should be done if that person were to be in a vegetative state. Some may wish to live, while others may prefer to be taken off life support. An experienced estate planning attorney can help individuals decide what documents are necessary to carry out their wishes.

Source: The Epoch Times, "Living Will vs. Living Trust," Arleen Richards, Dec. 5, 2012

Categories: Estate Planning