Why Do I Need a Will? What is a Living Trust? And I Have Never Heard of a POD!

Last Will And Testament

So you think that when you die everyone understands your wishes and desires and the whole process of getting you safely into the grave with all of your affairs in order is easy-peasy. Think again!

A common phrase, not admitted amongst the legal fraternity is, “The vultures descend”. This refers to the inevitable gathering that occurs upon someone’s death of relatives and friends, some of whose motives are questionable. Where money is concerned nobody should ever underestimate the lengths to which people go to secure an advantage.

Estate planning is the only way you can ensure that your wishes are adhered to after your death. In a will, the process by which this is accomplished is called probate, which is when a will is submitted to a court for administration after your death. The executor of the will, usually a person named in the will, is responsible for managing the affairs of the estate as it progresses through probate. The court will oversee your estate, payment of your outstanding obligations, and distribution of your assets according to the terms of your will. This can be a long and costly process that tries to ascertain what the persons wishes may have been and where this cannot be ascertained a chain of inheritance is established with the closest relatives taking precedence over lesser relatives. If you’re lucky probate can be simple, however, if there is money or property, rancor and division can result so your legacy may be the catalyst for the destruction of the very family you have loved.

An important factor to remember...

Probate is administered in court and becomes a matter of public record. 

LIVING TRUST

In the process of planning for your eventual demise there are more subtle ways of dealing with the distribution of your wealth and assets. Like a will, a living trust is also a document that details how you would like your estate and affairs handled after your death.

However, unlike a will, a living trust does not require your heirs to submit to the probate process.

A trustee is appointed, usually the person or company identified in the trust to handle the affairs of the trust The trustee is responsible for managing the trust estate until the trust comes to an end as planned. The terms of the living trust usually describe how one's assets are to be distributed. Further, this distribution can occur over many years if you so desire, thereby allowing you to retain a measure of control over your assets even after your death. You may also be able to place other restrictions over your assets, which can help to protect the assets from the creditors of your heirs or to ensure that your goals and objectives are met. Moreover, for those who value their privacy, since your living trust is not submitted to a court, the terms of your living trust are kept out of the public domain.

LIVING WILL

When we consider our mortality and are planning for the distribution of our worldly goods, we have to consider the rather delightful prospect: What if you don’t die. Of course the reaper gets us all in the end but sometimes what would have been a mortal event leaves you in a never land and unable to make decisions for yourself. A severe stroke can leave you a prisoner in your own body, unable to communicate your wishes to your loved ones. Worse, you could be comatose with little or no prospect of recovery.

A living will is a properly constituted legal document constructed to provide

an unequivocal account of your wishes and is designed to meet the requirements

of courts such that no challenge can be mounted or even considered.

The living will makes clear your pre-determined desires in respect of medical treatment, resuscitation, designation of persons you trust to fulfil your wishes and instructions to lawful authority. Most people fail to take into account other family members moral and religious code. In a situation where these family members may be in a position to decide for you, it is important that you retain control of your life even though you are physically unable to do so.

A living will is the surest way to ensure that when you are no longer able to make decisions and order your affairs, whoever does it for you, follows your clear direction, laid out on paper at a time when you were competent to make these decisions. The law provides a spouse with significant powers in this regard, though not as extensive as some would think. It is people in partnerships and other joint living arrangements that have the most to gain from setting up a comprehensive living will. Too many times we hear of a partner being completely excluded from the decision making process in the care of a loved one because there is no living will to overpower the rights of a next of kin. Usually there is little any attorney can do to correct this situation. It can all be avoided with a a little time spent in front of an attorney skilled in these issues to have the situation clarified in a way that will stand up in court.

 POD - PAY ON DEATH

The most common aspect of most people’s death is that it invariably occurs by surprise. Even the most well planned estate is going to suffer a delay before the provisions of the will are made known and can be acted upon. Immediate expenses can be a severe burden on surviving relatives. Pay on death is a device that will allow a pre-designated person to appear at a bank or financial institution and clear the accounts of all funds of a person who has recently died.

The deceased will, prior to their death have requested, filled out and had approved by each financial institution the necessary proformae to set the POD in effect.

The nominated beneficiary of this device need only show up with the death certificate of the account holder and the financial institution will pay the balance of all accounts detailed in the POD.

It is usual, though not necessary, for the POD to be mentioned in a will so that the proceeds are taken account of in the final distribution of the estate.

Importantly, the beneficiary of a POD will need to attend to claims on the estate that have primacy eg. IRS debt. Because a POD does not override probate (the legal settlement of a deceased persons affairs). It may be possible for the court dealing with probate to require the return of the money paid from the deceased persons accounts. The advantage of setting up a POD is that, in the case of a married couple, the survivor can get their hands on the money before probate eventually gives it to them, as expected.