Commonly-Used Estate Planning Documents
Power-of-attorney Form: A legal document by which you may appoint an agent (called an attorney-in-fact) to help you manage your property and financial affairs should you become incapacitated. A properly executed power of attorney form can help you avoid the need for a court-appointed conservator.
Health Care Directive: A document by which you may appoint a health care agent to speak to health care professionals on your behalf in the event you become incapacitated. Your health care agent can provide consent to treatment for you and can carry out your wishes regarding end-of –life health care. A properly executed health care directive may eliminate the need for a court-appointed guardian.
Will: A legal instrument that distributes your property upon your death. You may also use your will to appoint a personal representative (“executor”), nominate guardians for minor children, create trusts for minors and young adults, and reduce your estate tax liability.
Transfer on Death Deed: A deed that may be used to transfer real estate at death without probate. The transfer on death deed designates beneficiaries to receive specifically described real estate upon the death of the owner(s). While the deed must be recorded before the owners’ death, it does not convey a present interest in the property to grantees (beneficiaries).
Revocable Trust: A multi-purpose document the primary function of which is to serve as a will-substitute allowing you to transfer property at death without probate. It may also be used to provide for the lifetime management of your assets in the event of your incapacity (helping you avoid court conservatorship proceedings), create trusts for children and grandchildren after your death, and reduce estate tax liabilities.
Irrevocable life insurance trust (ILIT): A special type of trust designed to remove a life insurance policy from the insured’s gross estate in order to save estate taxes. The life insurance proceeds are generally made available to pay estate taxes and other expenses through loans and asset purchases and the assets of the ILIT are generally held for the benefit of the insured’s family.
Buy-sell Agreement: An agreement frequently used in closely-held businesses specifying the terms on which the interest of a deceased or withdrawing owner is to be acquired by the business or other business owners
Charitable Remainder Trust: An irrevocable trust that generates a potential income stream for the donor, or other beneficiaries, for a fixed period of time with the balance of the donated assets going to your favorite charity or charities.
Qualified personal residence trust (QPRT): A special kind of trust sanctioned by the Internal Revenue Code designed to remove the value of residential real estate from the grantor’s gross estate while also allowing the grantor to use and occupy the property during her lifetime. The QPRT is often used to hold a cabin or second home.
Grantor retained annuity trust (GRAT): An irrevocable trust that allows the grantor to leverage gifts to trust beneficiaries and remove the future appreciation in the value of trust assets from the grantor’s estate.
Family limited partnership (FLP): A business entity used in more sophisticated estate plans. It can often be used as a mechanism to bring younger family members into the business through gifts or sales of limited partnership interests.
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