Wills, Trusts, & Estate Planning

Hi, I’m Samantha. I’m the owner of SJF Law Group, and I am going to give you a quick overview of Estate Planning and the four main documents that you should have.

So the first one is called the healthcare surrogate designation, and we do this in combination with a living will as well. So this is where you are going to appoint somebody to be able to make medical decisions for you if you’re ever incapacitated. The living will part of it is the “pull the plug” document that most people are familiar with. That’s where you’re going to specify under what circumstances you would ever want to be removed from life support. So that’s medical decisions.

Then we’ve got a durable power of attorney. This is for financial decisions. So this document is applicable while you are alive. You would appoint somebody to be able to make financial decisions for you if you are incapacitated. So this person can pay your bills, they can talk to somebody on your behalf, buy and sell property, access your bank account, talk to your financial advisor—they can do just about anything under the sun financially related. So it’s everything other than medical decisions. It’s a very broad document, powerful document. You do have to be cautious with it, but it’s very, very important.

So the healthcare surrogate and the durable power of attorney together are what will help you stay out of a guardianship proceeding. If you are incapacitated and you don’t have these legal documents in place, then the only way somebody can help you is to go to court and become your court-appointed guardian. That’s a horrible process—you never want to be involved in that.

Okay, so next we have a will. That’s kind of like your basic document. A lot of people are very familiar with this, also known as last will and testament—not to confuse it with a living will, very different. So your last will and testament is a document that says who gets what and who’s in charge of administering your estate when you pass away. But a will only controls the probate process—that’s its main job. It does not keep your estate out of probate. It doesn’t put your estate into probate. It just says what happens if you die owning some sort of asset that must go through the probate process.

So probate is triggered by the assets that you own. I always say it’s like a title transferring process. If you die owning something and it doesn’t pass some other way, it must go through the probate process in order to get where it’s going. So if you have a will and something goes through probate, your will is going to dictate who’s in charge (the personal representative) and where do your assets go (your beneficiaries). So a will is important to have.

But then there is a trust. So typically we’re talking about a revocable trust. So revocable just means—just like it sounds—you can revoke it, you can modify it, you can make changes to it. It’s not permanent unless you die. An irrevocable trust is a really, really, really awesome tool to use. It helps us avoid the probate process. So any assets that you put into a revocable trust don’t have to go through probate—they will pass according to the terms of the trust.

And not only does it help avoid probate on its own, but it provides tons of protections to your beneficiaries. So let’s say you have minor kids. You leave your estate in a revocable trust for them—you’re going to avoid a guardianship for the minor kids. We never want anything going into a guardianship for your minor kids. It’s very time-consuming, it’s very expensive, it’s a pain in the butt. And then when they turn 18, the guardianship terminates because they’re not a minor anymore, and they get whatever assets are in there. So you certainly wouldn’t want to leave them a million-dollar life insurance policy and they get that at age 18.

If you put your assets into a revocable trust, you get to choose who’s in charge of it—that’s called the trustee. You get to choose at what age your kids get any control over it or when they get the money. So you can actually leave assets in trust for their lifetime, potentially, and let them at some age start participating in that trust as a co-trustee. And then at a little bit older age, you can let them take over as a sole trustee.

But those assets can stay in that trust. They have access to them, but the part that stays in the trust will be protected from creditors, from their spouses, or if they themselves are ever incapacitated and can’t function for themselves. The successor trustee would take over and manage those funds and pay their bills and make distributions for their benefit and their care. Or if they are disabled—if they’re receiving some sort of government benefits that are need-based—the trust can help ensure that they don’t lose those benefits.

Or in the unfortunate event that they actually pass away, the trust will specify where those assets go—maybe it’s to their children, your grandchildren, held in further trust.

So a revocable trust is a super important tool. You still need a will because they’re different, and a will controls probate. When we do a separate revocable trust, we do what’s called a pour-over will—meaning that if something goes to the probate process, it is going to pour over into the trust. So everything will end up in that trust one way or another.

So those are the four main documents: healthcare surrogate and living will, durable power of attorney, a last will and testament (or a will), and a revocable trust.

Hope you enjoyed this short video. Keep your eye out for some more.