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Wednesday, June 19, 2024

Estate Planning, the Blueprint of your Legacy – Foundational estate plan part 2


In the last column we discussed Powers of Attorney as core estate planning tools providing value during one’s life. The Last Will and Testament and Revocable Living Trust are also key elements of a strong, essential foundation.

The primary function of the Last Will and Testament (Will) is to direct the distribution of assets at one’s death. The Will appoints an Executor to carry out its terms which include the dispositive provisions, tax planning provisions and outlines the responsibilities and authorities of the Executor. For decedents with minor children, it also allows for the designation of a Guardian for those children. The probate court oversees the Executor to ensure the Will’s terms are followed.

The Revocable Living Trust (RLT) has a similar primary function in that it too directs the distribution of assets at the time of the grantor’s passing. The RLT designates a Trustee who follows the terms of the trust, which includes the dispositive provisions, tax planning provisions and outlines the responsibilities and authorities of the Trustee. However, it also provides disability planning as the RLT takes effect on the date of execution, not at death. Proactive steps to “fund the trust” or re-title assets in the name of the trust should also be taken. A trust is a private document and generally, the probate court does not oversee the Trustee’s actions if the trust is properly funded. Instead, the beneficiaries provide the oversight of the Trustee’s actions.

Some choose to use a Will as a sole estate planning tool. Alternatively, others institute an estate plan including both a Will and RLT. If this is the case, in conjunction with an RLT, a “Pour Over Will” is executed indicating that anything which did not get retitled or properly designated to the RLT during the grantor’s life should be added, or poured, into the Trust at Death by the Executor. The Pour Over Will also provides for the designation of Guardians for minor children.

The options are numerous as to how to structure the ultimate distribution scheme and both tools allow for an individual to provide for minor or disabled, spendthrift or responsible beneficiaries as well as charitable beneficiaries. It is important for one to understand the options and an estate planning attorney can walk you through those options and guide you in determining how to craft your legacy.

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Carleton W. Yoder, JD, LLM
Carleton W. Yoder, JD, LLMhttps://www.huckbouma.com/attorney/yoder-carleton/
Carleton Yoder is an Estate Planning Attorney at Huck Bouma, PC.  Carleton handles estates both large and small, and represents his individual and business clients' transactional and operational needs through the custom drafting of Wills, Revocable Living Trusts, Irrevocable Trusts, Grantor Retained Annuity Trusts, Charitable Remainder Trusts, and business succession plans.