Living Trusts, Wills, and Power of Attorney

Are you thinking about setting a living trust or will and don't know which is better? Are you interested in granting someone power of attorney to handle your financial matters? Learning about estate planning can be overwhelming, but you don’t have to stress about it. We will present the pros and cons of all the estate planning options so that you can make the right decision with our guidance.

When Should You Create a Living Trust?

Living trusts are the best option if you want to have as much control over your estate as possible during your lifetime, while also ensuring that your assets will be distributed to beneficiaries according to your specific instructions. The living trusts we are referencing here are revocable, so you can always make changes to the list of beneficiaries. One of the most common reasons people choose to create a living trust is that it can be very effective in protecting assets and privacy as well as potentially saving money from taxes.

It's also important to recognize that one of the major benefits of living trusts is that they save your estate from having to complete probate in the court, which can be time-consuming and costly. The privacy element of trusts also ensures that your family's financial matters will remain confidential and will not be open to the public, as opposed to wills. The downside of choosing a living trust is that it's more difficult and expensive to create than a will. Attorney counsel is always recommended when creating living trusts.

When Should You Create a Will?

If you are looking for the fastest and simplest way to create a legal document that ensures proper distribution of your estate, a straightforward last will and testament is recommended. Wills are generally less costly but do require disinterested witnesses and a notary in order to be properly executed. Temporary and permanent guardianship documents for minor children or pets can be added to either option.

The downside of wills is that they only become effective after passing away and that they are public documents. As a result, the stipulations for the inheritance and how it's split among the beneficiaries will be of public record. In addition, wills may be contested in court.

When Should You Grant Power of Attorney?

Granting someone power of attorney is another method to ensure that your financials are handled according to your wishes. Power of attorney is a legal document that gives a person (the agent) the power to act for another person (the principal). The agent will have legal authority or limited authority (depending on the stipulations) to make decisions about the principal's estate. This includes property, finances, and medical care.

The agent will be able to fill out taxes, engage in banking, apply for benefits, and invest on the principal's behalf. Therefore, this makes granting a Springing Power of Attorney to someone you trust an excellent method of handling the estate. However, there are many risks that need to be considered. The agent will have complete control over the estate and may potentially make bad decisions. Having the proper guardrails in place and using it in conjunction with overall Estate Planning is crucial.