The Living Trust, Durable Power of Attorney, and the Living Will
THE LIVING TRUST
For most of my clients, at the center of their estate plan sits a document known as a “living trust.” Sometimes, attorneys will create separate living trusts for spouses, and sometimes joint trusts, depending on their circumstances and state of residence. This type of trust is called “living,” because it goes into effect and protects you even while you are alive. It also lives on past your own death, and in some cases, beyond the death of your immediate heirs. Think of it as a “super will.”
A living trust is a legally defined “bucket” into which you place certain kinds of assets so that you and your “successor trustees” have control over those assets. A living trust anticipates your incapacity and death and puts into place your long-term wishes. A living trust is not a legal fiction, but a well-recognized mechanism in an American society that has proven itself time after time to be the best way to plan your estate and protect your legacy for the people and causes you care about.
During your lifetime, you have complete control over this bucket. But, when you become incapacitated or die, a living trust can be easily handed to the next generation.
We’ll learn a lot more about living trusts as we go along. For now, you should simply know that every living trust is controlled by a trustee, and that trustee will probably be you while you are alive. It also has a beneficiary, and again, that beneficiary is probably you (or you and your spouse) while you live. When you die, the trustees and beneficiaries are updated in an orderly fashion, and the trust moves forward in time without the need for courts.
Most people have heard of living trusts. But in this book, you will find out what you don’t know you don’t know about them, and become empowered to build out your own correctly.
DURABLE POWERS OF ATTORNEY FOR PROPERTY AND ADVANCED HEALTHCARE DIRECTIVES (DURABLE POWERS OF ATTORNEY FOR HEALTHCARE)
Other crucial documents in an estate plan include “durable powers of attorney.” Those powers that pertain to property say, “If I get sick, such-and-such persons have a continuing (durable) power to take care of things that aren’t in my trust bucket. This person can collect a registered letter from the post office on my behalf, pay my bills, and choose a nursing home for me. This other person can make decisions for my business and my financial holdings. This third person can deal with my IRA, 401(k), 403(b), digital assets, Facebook page, Twitter feed, blog, Instagram, Dropbox, and other social media accounts.”
More documents grant advance healthcare directives and “durable powers of attorney for healthcare decisions” when you are unable to make those decisions for yourself. Should the doctor try that new operation? Continue chemotherapy? These documents can have different names in different states, like “advanced healthcare directive” or “physician’s directive.”
Scary subjects? Maybe. But again, if you don’t decide who to entrust with these decisions, someone else will. Why? Because the decisions will have to be made, even if you are just out of action for a few hours on the operating table.
THE LIVING WILL
Most people are familiar with the concept of a “living will” (not to be confused with a “living trust”). A living will states your desires in case of truly extreme medical situations. As with the other documents, your attorney can discuss specific issues with you in detail. Think of a living will as a permission slip that you give your loved ones to let you go when it’s your time. But, you may want to say a lot more than, “If I’m a goner, pull the plug.”
If you make sure your living will has a way of getting into the right hands at the right time, its instructions will be followed by whoever you give a healthcare power of attorney, as well as by your doctors, even if you cannot communicate with them.