Wills, Trusts, & Estates

Revocable Trusts
Living Wills, Health Care Proxies, and Advance Health Care Directives
The Probate Process
Planning With Retirement Benefits
Executors and Trustees


Estate planning is the process of preparing for the transfer of property at death, as well as handling a number of other related personal and financial matters. It usually involves the advice of professionals such as your lawyer, life insurance advisor, accountant, banker, broker, or financial planner. The central document in any estate plan is a will. Other elements of an estate plan may include trusts, power-of-attorney, health care planning documents, living wills, benefit plans, insurance and more. This guide is meant as a starting point in a process that should also include qualified professional guidance.


What Does a Will Do?

A will directs the distribution of your assets at the time of your death in. Some states impose some limits on this such as disinheriting a spouse or, in some cases, children. Assets held outside your estate such as joint property, life insurance, retirement plans and other death benefits are not governed by a will unless they are payable to your estate.

Wills vary in complexity and the objectives they are designed to achieve. In addition to providing for disposition of assets, wills may be designed to accomplish a number of other important objectives, including:

  • Tax planning
  • For minor child(ren), designating a guardian, establishing a trust, and appointing a trustee
  • Designating an executor of your estate
  • Providing for the needs of others
  • Designating successor custodians if you are acting as a custodian for the assets of a child
  • Supporting charitable causes of your choice

What a Will Does Not Do

A will does not control the distribution of non-probate property, which legally pass to someone else upon your death. Non-probate property may include:

  • Jointly owned property
  • Trusts
  • Annuities and Retirement Benefits
  • Life insurance
  • Non-probate property issues should be carefully planned for by a qualified expert to ensure that your intentions can be accomplished.

What if You Die Without a Will?

If you die without a will, state law will govern the distribution of your assets. Typically the distribution will be to your spouse, children, and/or family members. That distribution may or may not be what you would want. A will allows you to make your wishes clear.


Revocable Trusts

What is a Revocable Living Trust?

“Living trusts” (also known as “revocable trusts” or “inter vivos trusts”) are trusts created during your lifetime that can be revoked or amended at any time prior to death. An “irrevocable” living trust is permanent and cannot be modified. Irrevocable trusts are usually established to achieve certain tax objectives.

Living trusts have legal ownership of the property you transfer into the trust. While you are alive, a trustee (who may be you) manages trust assets as you wish. Upon your death, the trustee continues to follow the directives of the trust, which may include distribution or continuation of the trust.



Power of Attorney documents give another person the legal ability to act on your behalf. The person named to act on your behalf is called your “agent” or “attorney-in-fact.” The agent’s power may be broad ranging or specific to particular circumstances. It may take effect immediately upon signing or it may be linked to a future condition (e.g., a determination of incapacitation). The power may be permanent or temporary and may be revoked. Your agent will be permitted to take any action on your behalf which is permitted in the document granting the Power of Attorney. Such power could include transferring title to real property, buying or selling securities, writing checks and other financial transactions.

What are the benefits of having a Power of Attorney?

One benefit is convenience. By granting a Power of Attorney, you may not need to appear in person for certain transactions. This can be especially helpful under circumstances in which you may not be able to act on your own behalf for whatever reason.

Another benefit is to avoid having the court appoint someone to act on your behalf should you become unable to manage your personal or business affairs. People so appointed are called guardians, conservators, or committees, depending on state law. With a Power of Attorney, you are in control of who acts on your behalf, to what extent and under what circumstances.

Who Should Be Your Agent?

Often people select a family member to be their agent. You should plan for a successor agent in case the person you select is unable to act when the power takes effect. The best choice of an agent is someone you trust who is capable of handling the required affairs. The person may not be a minor or otherwise incapacitated.

Other Duties of the Agent

The agent may not change your will, but may be allowed to create or change trusts, transfer assets, make gifts and perform other transactions. For this reason, it is important that the scope of the agent’s powers be clearly specified in the document. The laws of the state in which you reside when you sign a Power of Attorney will usually govern the powers granted in the document.


Living Wills, Health Care Proxies, and Advance Health Care Directives

“Living Wills,” “health care proxies,” or “advance health care directives” allow you to address how you want to be treated in a variety of medical situations. State laws vary, but every state permits you to specify your wishes regarding treatment for terminal illness or injury and to designate someone to express these wishes on your behalf.

Living Wills

A “living will” is a document expressing your desires as to how you wish to be treated under certain medical conditions. Options you may be able to specify include whether or not you receive life-sustaining treatment (e.g., ventilators, heart-lung machines, etc.), whether you receive intravenous food and water, or other procedures.

A living will applies to circumstances in which available treatments may extend your life for some period of time and the lack of treatment will result in death. A living will does not deny you access to pain medications or treatments to make you more comfortable. Living wills do not cover routine medical treatment for non-life threatening conditions.

Health Care Proxy

A “health care proxy” (also known as a “health care surrogate” or “durable medical power of attorney”) involves appointing someone to act on your behalf with regard to medical decisions should you be unable to do so. It is advisable to designate an alternate person in case your chosen proxy is unavailable. Although it can be difficult, it is useful to discuss your wishes with your chosen proxy and family members so they will be well prepared to serve you.

Advance Health Care Directives

Health directives give you the opportunity to express your wishes regarding medical treatment at the end of your life. Physicians prefer these documents because they are a written expression of your intentions and as such are less ambiguous.

Obtaining and Maintaining Documents

Your attorney can provide you with appropriate forms and documents. Laws vary by state, so be sure to obtain documents appropriate for your state. Signing of the documents must be appropriately witnessed, usually by two individuals who are not involved in your inheritance or other affairs. You may change any of these documents by destroying them and creating a new one if you wish. Keep the documents in a secure location that is known by a responsible adult, such as your designated proxy. In the event you are admitted to the hospital, you should provide copies to the hospital staff for your file.


Organ and Tissue Donation

Part of your advance directive may include your wishes as to organ or tissue donation at the time of your death. If you choose to be a donor, you need to express this wish to your health care proxy, your family, and your physician. You may also need to be registered as a donor.


Communication is Critical

Communicating your wishes to others is essential. Discuss your wishes with your family and loved ones, your health care proxy, and your physician. The more these individuals know about what you want, the easier it will be for them to act on your behalf.

The Probate Process

Probate is the court-supervised process of transferring property at death according to a will. “Probate” is also used to refer to the entire process of gathering your assets, paying debts, taxes and expenses, and making appropriate distributions. The executor administers the process and is accountable to the beneficiaries. The executor is entitled to a reasonable fee for services. Legal obligations for tax filings and payments typically fall to the executor.

Should Probate be Avoided?

In the recent past, some states have had probate processes that were perceived as too slow and costly and thus lawyers sometimes recommended probate avoidance techniques such as revocable trusts. Many states have made the probate process less cumbersome. “Avoiding probate” may or may not be a valuable goal, depending in part on state law and your particular circumstances. As such, the best answer is usually determined on a case by case basis.
Often a properly drafted will can simplify the probate process considerably. Much of the administrative burden of the process involves tax filing requirements, however, which cannot be avoided.

Planning with Retirement Benefits

Information in this section and elsewhere is provided as a general guide and introduction to the topic and should not be relied upon for financial planning purposes. Please consult a professional advisor who is familiar with your individual circumstances.

With the increase in the use of individual retirement accounts (IRAs) and other types of qualified plans has come the need to include tax planning for these instruments as part of an overall estate plan. While assets held in IRAs and other qualified plans do not create an income tax obligation, the distribution of those is subject to income tax. The IRS generally will impose penalties if withdrawals are made before age 59½ or conversely if minimum withdrawals are not made before the age of 70½ (technically, the required beginning date usually is April 1 of the year after reaching this age). Proper financial planning can have an impact on the minimum amount required to be withdrawn.

Distributions to the Participant

The IRS generally will impose penalties if withdrawals are made before age 59½ or conversely if minimum withdrawals are not made before the age of 70½. Proper financial planning can have an impact on the minimum amount required to be withdrawn. The minimum distribution requirements are a floor, not a ceiling. The participant is free to withdraw more than the required minimum. The amount of the minimum distribution requirement can be affected by several choices the participant can make. These choices involve selecting a method for calculating remaining life expectancy and the choice of beneficiary, which can affect the life expectancy calculation through the use of a potential “joint life expectancy” calculation. The rules governing these calculations can be complex and in some cases irreversible. A qualified advisor can ensure that proper planning is achieved.

Distributions After Death

  • Upon the death of the participant, assets are distributed to the beneficiaries according to rules that vary depending on the beneficiaries’ relationship to the participant and the date of death.
  • If the beneficiary is the spouse, he or she can roll over the assets into a new IRA and recalculate minimum withdrawal requirements based on his or her own life expectancy calculation, including naming a new beneficiary and recalculating using joint life expectancy.
  • If the beneficiary is an individual, but not the spouse, and the participant was not yet subject to minimum withdrawal requirements, generally plan assets can be withdrawn over the beneficiary’s life expectancy. Again, complex rules apply to different situations, especially if the beneficiary is a trust, estate or charity, and professional advice is appropriate.
  • If the beneficiary is not the spouse and the participant was subject to minimum withdrawal requirements at the time of death, the beneficiary must withdraw the assets “at least as rapidly” as did the participant. The tax planning potential pitfalls here are enormous. Proper advice and planning can make the difference between an enormous tax bill due immediately on the entire amount of plan assets or the ability to defer taxes over an extended period of time.

Estate Taxes

The value of assets in a qualified plan will also be subject to estate taxes. Proper planning should therefore consider:

  • The beneficiary designation in the plan documents will supersede any distribution instructions provided for in the participants will.
  • It is always a good idea to name a designated beneficiary, if possible. Without this, the ability to defer withdrawals may be severely limited or eliminated completely.
  • Review the plan on a regular basis, especially after divorce, death in the family or other major life event. In particular, the plan should be reviewed just prior to the beginning of required minimum withdrawals so that proper elections can be made.
  • When plan assets are large or the estate plan is complex, the need for professional advisory services becomes even more important.

Executors and Trustees

After a person’s death, an executor, trustee or personal representative is responsible for bringing a person’s estate to an orderly conclusion. This process includes gathering assets, paying debts, filing taxes, settling business affairs, and distributing assets in accordance with the will.

Specific activities and responsibilities typically include:

  • Review the will
  • Engage an attorney to assist with performing duties properly
  • Engage other advisors as needed (accountant, financial planner, etc.)
  • Determine if probate is necessary
  • Determine what reports must be prepared
  • Value and manage the assets of the estate
  • Maintain proper insurance coverage
  • Determine and pay bills
  • Plan for and distribute assets
  • File tax returns (personal, trust)
  • Close the estate

Other Issues

  • Expenses—Expenses incurred in the administration of the estate are generally reimbursable from estate assets. These include appraisal fees, attorney/accountant fees, insurance premiums, funeral related expenses, etc. The administrator is also entitled to reasonable compensation for his/her time.
  • Administering Trusts—Continuing trust administration will include asset investment and distribution, as well as tax filing requirements. Terminating the trust at a future date in accordance with trust documents may also be required.
  • Liability—The estate administrator has a fiduciary responsibility (legal obligation to act for the benefit of others). As such, errors or mismanagement by the fiduciary can create personal liability. The best way to avoid liability is to obtain qualified advice and fully document all transactions.


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