The trust owns your assets and you manage them while you are alive.Īfter your death, the trustee-the person you choose to manage the trust when you can no longer do so-distributes the assets to the beneficiaries you have chosen. A living trust is an alternative to a last willĪ living trust allows you to take assets you own and place them into the ownership of a trust you create during your lifetime. In other states, there is a separate document for that, called a health care power of attorney. In some states, you can include the person you select to make the decisions for you if you are unable to in this document. This document is sometimes called a living will. You can spell out exactly what you do or do not want-for example, ventilators and feeding tubes. Advance care directives manage your healthĪn advance care directive is a document that states what your wishes are for medical and end-of-life care should you be unable to make those decisions for yourself. It is only effective during your lifetime, so it is no longer active once you pass away. A financial power of attorney does not grant the authority to make medical decisions on your behalf. The power of attorney only applies to the specific types of matters and transactions you authorize in the document. You can set a power of attorney up to become active only if you are incapacitated, or you can create it so that it is effective immediately if you want to use it for convenience, such as when you are out of town. Each state has its own rules regarding power of attorney. It's important to keep in mind that a will does not control the distribution of all assets, including but not limited to:Ī power of attorney document authorizes the person you choose to handle financial matters on your behalf if you are not able to. In the will, you can name a guardian who will care for your children should you and the other parent die before the kids become adults. This is the person who will make sure the terms of your will are carried out exactly as you want.Ī will is crucial if you have children under the age of 18. In your will, you also choose an executor. If you don't write a will, your assets are distributed according to plans outlined in your state's intestacy laws. Here's what each of these documents accomplishes.Ī will states who assumes ownership of your assets and belongings after you die. These documents include a financial power of attorney, an advance care directive, and a living trust or a last will. A comprehensive estate plan typically includes four estate planning documents.
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