Estate planning is essentially preparing for the possibility of mental incapacity and for death. Depending on which type of plan you need, different estate planning tools can be used to help prepare you for either event. One of the reasons you need to plan for death is to ensure that your assets are inherited by the people you intend. Another reason is to reduce the amount of estate taxes that will be assessed. Planning for incapacity is necessary to provide protection for individuals who cannot make decisions for themselves.
Estate Planning in Fayetteville Arkansas
Estate Planning for Mental Incapacity
Becoming mentally disabled is a stressful situation, not only for the disabled individual, but also those people who are there to care for them. When that situation occurs, the person who is incapacitated will need to establish a two part estate plan. One part to care for personal decisions that need to be made and one to handle financial decisions. If there is no plan in place, the disabled individual, along with his or her assets, will wind up in a court-supervised guardianship or conservatorship.
Advance Medical Directive
An Advance Medical Directive, also called a Medical Power of Attorney in some states, is one legal document that is required in order to delegate personal decisions to someone else. This instrument will allow you to choose someone to take care of your personal needs and make medical decisions on your behalf. An Advance Medical Directive can take effect whether you are temporarily or permanently incapable of making such decisions.
Financial Power of Attorney
When you need someone to make financial decisions on your behalf, the legal document required is known as a Financial Power of Attorney. This document will allow you to choose someone you trust to manage your financial affairs. If you execute a “durable” power of attorney, that person can immediately take care of your property and financial affairs and can continue to do so in the event you become mentally incapacitated.
Estate Planning for Death
When you pass away, you will also need a two part estate plan. One part to see to the payment of your debts and the other part to designate who will receive the balance of your estate. The most basic estate planning instrument is the Will or Last Will and Testament. A will is essentially written instructions regarding how you want your estate to be handled when you die. One drawback of using a will is that the property must go through probate with the court before your assets can be distributed.
Revocable Living Trust
Another instrument is a Revocable Living Trust, which can be used to plan for both mental disabilities and death. In fact, provisions for both can be included in the same document. A revocable living trust allows you to control your assets while you are still alive. You can designate a person of your choosing to manage your finances and your personal well-being in the event you become incapacitated. You can also include instructions for your loved ones regarding disposition of your assets after your death. A benefit of using a living trust is that your heirs can gain immediate access to your assets after your death.