There’s often confusion between the similar sounding Living Will and Living Trust. The first is for medical purposes, and the second is for financial needs.
A Living Will provides a trusted friend or relative with the authority to make decisions regarding certain last medical measures when you’re in a terminal condition. This has nothing to do with transferring assets or property after death.
A Living (or Revocable) Trust, on the other hand, is a financial vehicle that provides for the after-death transfer of ownership of trust assets like a will but has lifetime and after-death control of the trust’s assets by a trustee.
Another important estate planning document is a durable power of attorney (DPOA). This document gives an agent the authority to make medical and financial decisions under the specifically stated conditions.
These documents make certain that someone you trust will always have the power to act on your behalf—this can prevent the need for a court proceeding to secure this authority during a critical time.
Another item on your list of estate planning documents is the form used to select the beneficiary for your life insurance and retirement funds. Neither is controlled by your will unless your estate is the beneficiary, which may not always the best option financially. That’s because naming your estate as the beneficiary of your retirement funds can result in additional income taxes being owed due to the short payout period when an estate receives those funds. No one wants their estate to pay extra taxes.
You can now see that although a will controls major aspects of a person’s estate, it’s not the only document that can protect your property and your well-being. An experienced estate planning attorney can help you prepare the necessary documents to protect your loved ones.
Reference: The (Beckley WV) Register-Herald (October 15, 2017) “Important Medical and Financial Choices”