Episode 44: Wills, Trusts, and Everything in Between

Estate Planning Lawyer, Peter Klenk

Wills, Trusts, and Everything in Between

We’re here to talk about death and taxes and estate planning today. The subject today is wills, trusts, and everything in between. I’m just gonna do an overall look at the typical documents that you would use and have in an estate plan. You can listen and I’ll go over a general overview. Just make sure you have everything you probably do. And if you don’t, maybe give us a call and talk about how some of these documents will help you out.

So, okay. An estate plan—it’s funny. People hear “estate plan” and they think, “Well, you gotta be a billionaire to have one.” But the reality is, an estate plan is just having a will. It’s having a plan for your estate when you die. And remember, if you don’t do it, the government steps in and they have a plan for you. It’s not necessarily a bad plan—maybe it’s exactly what you want—but the government has an interest in your assets passing as soon as possible, paying debts, and going to somebody so they’re not wasted. The houses don’t fall apart, and money isn’t just lost in the bank.

So their plan about who gets things if you’re intestate might actually be fine, but it might not. And the reality is, when it comes down to it, why shouldn’t you pick where your money goes when you go? You worked hard for it. And who’s in charge? Not only when you die, but while you’re alive if you need help. That’s all part of the estate plan too—who helps you if you’re not able to help yourself and you’re still with us.

Let’s go through the basics. Start with a will. A will is the document that says where your stuff goes when you die. That’s it. It has to be in a specific format and follow certain rules. Every state has its own rules, so you just want to make sure you follow them to be valid. That document then is what is going to happen, as long as it can be found.

So if you put it in a box and the box gets thrown out, your will isn’t going to be of any good. You want to make sure everybody knows where to get it. Usually, you leave it with your lawyer and tell everybody, “Here’s my lawyer.” That way, even if your house burns down or you get sick and all your stuff gets bundled up and put in storage, it isn’t lost. Your plan is carried out.

Now, a will can cover an infinite number of things. We have trusts to protect kids, address charities, or special needs individuals. We won’t go into detail here, but you want to make sure your plan is carried out. This might also be taken care of by a revocable or living trust, which avoids probate and carries out your will as if it were your will. Those two things team up.

How about IRAs and 401(k)s? Those are contracts with the federal government. They usually go to whoever you name as beneficiary. They don’t go through your will or trust. But there’s lots of tax tied up in those. You want to make sure you’ve thought it through, especially if the beneficiary is on Medicaid, has special needs, or is a minor. In those cases, you can put them in a trust—called an IRA trust—to manage the assets properly.

So, when you die, there are three typical groups of documents: your will or revocable trust, and an IRA trust for qualified plans.

But what if you’re alive and need help? Someone has to manage your money, make medical decisions, or take care of a minor child. A will might name a guardian if you die, but who takes care of your kid if you’re sick? There are three documents for this:

1. Medical power of attorney – Grants someone the authority to act for you medically. It usually includes a living will.
   
2. Temporary guardianship – Authorizes someone to care for your minor child if you’re incapacitated.
   
3. Financial power of attorney (durable) – Authorizes someone to handle your finances, pay bills, talk to insurance companies or the IRS if you’re incapacitated.

It’s important to pick the right people. Someone good with numbers might not be good in a hospital. Think carefully about who is right for each role.

So, in summary: when you die, you have a will or revocable trust and, if needed, an IRA trust. While you’re alive, you have a financial power of attorney, medical power of attorney with living will, and temporary guardianship for your child if applicable. These are the typical documents everyone can use. There are others depending on your circumstances, but these cover most situations.

That’s a quick introduction, a quick rollover. I look forward to working with you and helping you out if you need help. In the future, if you have any questions, give me a ring. Happy to talk. Death and taxes is our thing.

So, it’s Peter Klenk signing off. Like and subscribe to hear future updates. Have a great day. Bye now.