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Importance of Rhode Island Estate Planning & Explanation of the Various Documents Used in Estate Planning

January 7, 2017

 

Most people tend to put off planning their estate. They think that just because they are young and healthy or that they do not have many assets, there is no reason to plan their estate. Estate planning is not only responsible; it is one of the most generous gifts you can give to your family.

 

Everyone should have an Estate Plan. It is a responsibility that should not be ignored or put off. Estate Planning is important for several reasons. Firstly, an estate plan will ensure that your wishes relative to your assets, children, and beneficiaries are followed and accomplished. It will help eliminate conflicts during an already emotional time. Secondly, a properly structured estate plan will help your beneficiaries avoid the need for probate and will save your estate and beneficiaries thousands of dollars in probate and attorney fees. Thirdly, proper estate planning can help minimize or eliminate assets being lost to Medicaid and other liens/creditors.

 

With all of the areas covered in estate planning, it is important to have a knowledgeable attorney that can answer all of your questions and make sure your family won’t have to worry about what to do in the event that something happens to you and will help avoid conflicts that could arise.

 

An Estate Plan is much more than just a will. It involves several key documents and numerous decisions to provide a complete plan of action during your lifetime and beyond. Below I discuss a few of these important documents.

 

Will:

 

A will (also referred to as Last Will & Testament) is a written document that takes effect at the death of the person signing it (the "testator"). A will covers all property owned by the testator at death. A state court proceeding ("probate") is instituted and the provisions of the will are implemented under supervision of the probate court. Both the tax and family estate planning objectives of the decedent can be accomplished with a will. The will appoints an Executor, the person in charge of carrying out your wishes, dealing with probate and closing out your estate. A will also appoints a guardian for minor children. Finally, a will provides instructions for the distribution of your estate to your selected beneficiaries. When a will is used in conjunction with a trust, the will is referred to as a "pour-over" will. Instead of making distributions in the will you make them through your trust. The will simply pours your assets into the trust for distribution. As opposed to a will which is a public document filed at town hall, a trust is a private document and your distributions will be kept private.

 

Living Will:

 

Most people confuse a Living Will with a standard Will (Last Will & Testament). A Last Will & Testament as stated above provides instructions for the appointment of an executor and a guardian and provides for the distribution of your estate. A Living Will pertains to your wishes relative to healthcare in the event you become terminally ill/incapacitated. A standard living will states that in the event you are terminally ill and are only being kept alive by life support that it is your wish to die naturally.

 

Power Of Attorney:

 

In Rhode Island, you can sign a durable power of attorney to appoint someone to handle your assets if you become incapacitated. At a minimum, a power of attorney should include the power to:

 

• Manage and transfer all assets
• Deal with the IRS
• Make gifts on your behalf
• Create and amend any trusts you set up

 

You don’t need to transfer any assets at the time you sign a power of attorney, but it’s a good idea to keep the person you’ve chosen informed about your ongoing financial matters.

You can also sign a durable power of attorney for health care to appoint someone to make health care decisions for you when you’re unable to do so yourself. This person can provide informed consent for treatment or even refuse treatment for you.

 

Trusts:

A living trust (sometimes called an "inter-vivos" trust) is a document that is revocable at any time by the person signing it ("grantor"). Living trusts have become quite popular as a method to avoid probate. To avoid probate, the trust must be funded; this means that title to the assets which the grantor owns personally must be actually transferred to the trust -- real property is deeded to the trust; bank accounts are switched to the trust; and stocks, bonds, partnership interests and other holdings are assigned or transferred to the trust. NOTE : The grantor is usually the trustee and beneficiary of the trust during his or her lifetime. The initial trustee will be you during your lifetime and you retained full power and control over the assets in the trust.

 

Having the peace of mind that your assets, children, and many other important things will go where you want them to without issues if you are not around is probably the most important reason for having a properly prepared and executed estate plan.

 

Give your family a true gift today and call us at 1-401-941-LAW1 (5291) or contact us to see how we can help you with your

Estate Plan.  Schedule a free consultation with Attorney Jared Tomassi online today.

 

 

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