MS RESIDENTS ONLY
Estate planning is a proactive approach that allows you to establish the who, what, and when of what happens to your property (1) if you become incapacitated or (2) at your passing. The plan provides a roadmap for families to follow when you can no longer communicate your wishes. Without a recognized estate plan, the court decides how to distribute your assets. The results can be devastating to families that have discussed informal arrangements that were not properly established through appropriate planning. An estate plan should include, at minimum, your Last Will and Testament, a Durable Power of Attorney and an Advanced Healthcare Directive. A trust is a fourth estate planning tool that should be considered in some circumstances.
What is a Last Will and Testament?
A will is a testamentary written instrument that allows you to dispose of your property to intended beneficiaries. It is effective when signed, but it is not operative until your passing. A will is submitted to the chancery court for probate, which is a necessary process in order to distribute assets in accordance with the terms of the Will.
What is a Durable Power of Attorney?
A Durable Power of Attorney allows you to name a someone to make financial decisions for you in the event that you become incapacitated. The powers granted in a DPOA are powerful and immediate, so you should only name a person that you absolutely trust. If you do not have a DPOA and become incapacitated, your family would have to obtain a conservatorship, which is a much more timely and costly legal process that designates someone as the legal representative for you.
What is an Advanced Health Care Directive?
An advanced health care directive, also known as a “Living Will”, allows you to state your wishes regarding life support and other medical care in the event that you become incapacitated or otherwise unable to state your wishes.
What is a Trust?
A trust is a legal arrangement through which a trustee holds legal title to property for the beneficiary. A testamentary trust is a trust created by a will. Such a trust has no power or effect until the will is probated. An inter vivos trust can either be revocable or irrevocable. With a revocable trust, the donor maintains complete control over the trust and may amend, revoke or terminate the trust at any time. An irrevocable trust can be used as a planning tool to avoid probate. An irrevocable trust cannot be changed. Irrevocable trusts are sometimes used to protect assets for those trying to qualify for Medicaid. In certain circumstances, a supplemental needs trust may be an appropriate planning tool. The purpose of a supplemental needs trust is to enable the donor to provide for the continuing care of a disabled spouse, child, relative or friend.
ESTATE PLANNING TIP
Estate planning is an ongoing task. Estate plans should be updated whenever you experience noteworthy life changes. Acquiring a rental house, selling an existing home, buying stocks, new children or grandchildren, marriage or divorce are all significant life changes that might impact your estate plan.
