No one likes to think about what will happen when death comes to them. However, legal planning is necessary so that in this event friends and family members will be able to make sure your wishes are followed. There are several types of wills that can be created, and depending on your financial portfolio and the depth to which you want to control how your estate is treated at the time of your death.
A will, as defined by Law, is a legal declaration in which a person, or a couple, names those they wish to transfer their property to at the time of their death. Wills can be written by an individual as long as they are over the age of majority and of sound mind. The age of majority is defined as over the age of 18 in America. Sound mind simply means that a person is rational when they create the will, or not clinically defined as insane or incompetent. Typically, however, an attorney is used to create a will. There are several laws that exist, different from state to state, that define rules regarding wills. For example, in community property state, a surviving spouse cannot be left out of a will. Using an attorney to create a will ensures that it is completely legal and that upon your death, your wishes will be carried out just as you dictate.
Living wills are those that a person creates to make known their wishes regarding life support and medical treatments in the case that they are left incapacitated and unable to make their wishes known. If you are involved in an automobile accident that leaves you in a coma and hooked up to life support, if you do not have a living will, your relatives will have to make the decision of whether to leave you hooked up to life support indefinitely or allow you to pass on without it. This can be an emotionally devastating decision for family members to make, and knowing your wishes through a living will makes the decision simpler and ensures your wishes are followed even though you cannot express them physically at the time.
A living trust is actually a mechanism that is used to hold and distribute a persons assets in order to avoid probate. A probate is a function of wills that involves a third party inventorying and appraising the property, and then paying debts and taxes accrued before distributing what is left over from the estate to the surviving family members. A living trust allows the entire state to be transferred to your surviving family at the time of your death without having to use a probate.
Advanced planning is the creation of a course of action, which you set down in legal form, in the case that you become ill and unable to plan for yourself. Some of the areas covered under advanced planning include estate tax planning, asset protection planning, business succession planning, planning for disabled or problem beneficiaries and creating a family or charitable legacy.