A Brief Overview of Common Estate Planning Documents

The most common vehicle used in estate planning today is the Revokable Intervivos (Living) Trust.  The primary advantage of a Living Trust is that it avoids probate upon the deaths of either the first or second spouses to die.  This, of course, decreases the length of time necessary to administer an estate following death, and can decrease the expense of administration as well.

A Revocable Living Trust avoids probate because the Trust, rather than you individually, owns your assets.  This includes everything from  bank accounts to investment accounts, stock, real property, and tangible personal property.  Because the Trust is the owner of these assets rather than you individually, there is no individual estate left at death to probate.  The Trust specifies who will receive the assets after death, and in what proportions. 

Whereas a Will is administered by an Executor, a Trust is administered by a Successor Trustee who is commonly one or more children, or other trusted family members.

While you would no longer be the individual owner of your assets, this results in no change from a practical standpoint in the way your assets are managed.  This is because you would be the Trustee of your Trust as long as you are living and competent.  The Trustee has power to manage the assets of the trust estate in any manner that he or she may choose.  For this reason, clients notice practically no difference in their ability to manage their assets with or without a Trust.

Another advantage of a Trust is that it avoids the necessity of a guardianship should either yourself or your spouse become incapacitated, either mentally or physically.  All that is necessary is that your Successor Trustee obtain certified letters from two doctors stating the nature of the incapacity, and that the letters be filed with the County Clerk.  Once this is done, the Successor Trustee automatically assumes control of the Trust without the necessity or expense of a guardianship.  This is a true advantage that many clients often overlook.

In addition to the Trust, there are other documents that are recommended to accompany the Living Trust.  These include a Pour-Over Will, which is a special Will drafted to accompany the Trust.  The purpose of the Will is to place into trust ownership any assets that, for whatever reason, are not transferred to the Trust during the lifetime of the Trust creator.  Other documents include Durable Powers of Attorney, which allow you to nominate someone to make decisions on your behalf should

you ever be physically or mentally incapacitated, and an Advanced Directive to Physicians (Living Will).  The Living Will allows you to state your preferences as to whether or not you wish to have life-sustaining treatment administered to you in the event you are seriously ill, and there is no hope for your recovery. 

In certain circumstances, a properly drafted Trust can provide additional benefits to persons with large estates.  In many cases, estate tax liability can be reduced or eliminated altogether through the use of a properly drafted Trust. 

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