Estate planning is the process of arranging for the management and distribution of an individual's assets and affairs in the event of their death or incapacity. Estate planning typically involves the creation of legal documents such as wills, trusts, and powers of attorney, but many other elements and considerations go into estate planning, too.
Wills and Estate Plans in Birmingham and Throughout Alabama
A last will and testament (Will) is a document you create to instruct how you want your property distributed upon your death. If someone dies without a Will, this is known as dying "intestate." Should a person die intestate, the state will step in and distribute any property.
Each state's requirements of a Will and what makes it valid may differ somewhat, but all states have four requirements that are true no matter what.
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The testator must have testamentary intent, meaning the testator subjectively intended to create the Will.
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The testator must have testamentary capacity, meaning that they understood they were creating the Will at the time of its execution.
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The Will must have been executed without the interference of fraud, duress, undue influence, or mistake.
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The Will must have been duly executed through a proper ceremony––for example, signing the Will and having witnesses per your state's law were completed properly.
Trusts and Estate Plans
A trust is a way for a property owner to pass their assets to someone else to protect the assets and to avoid the probate process, if applicable. The trustor, also referred to as the settlor or trust maker, is the owner of the property and transfers it to the trustee. The trustee is the one who manages the property for the benefit of someone else, known as the beneficiary. A beneficiary is a person or entity with whom the trust was established.
Trusts can have multiple trustors, trustees, and beneficiaries. Typically, a different person or entity serves each of these unique roles. Sometimes, though, the trustor can act as both the trustor and trustee. Likewise, in limited situations, the trustee can act as both the trustee and the beneficiary.
As part of an estate plan, a trust can be used to minimize estate taxes (for someone with high assets). But they offer other benefits, too, if well-crafted. A trust can keep your assets private even when you die because a trust does not need to go through probate, and probate is a matter of public record. Further, a trust can protect assets from creditors or help beneficiaries who cannot manage money well.
Whatever your need is for a trust, our estate planning lawyer can help make sure your trust is drafted in a way that benefits you and the intended beneficiaries.
Powers of Attorney and Estate Plans in Birmingham and Throughout Alabama
A power of attorney is the legal authorization for one person, the agent, to act on behalf of another person, the principal. Often called a letter of attorney or just a "POA", they are a common element of estate planning. POAs let a person who is losing their ability to manage their own affairs choose someone they trust to make decisions for them.
There are six types of POAs, described below.
1. Durable POA
A durable POA takes effect immediately upon your signature unless the POA states otherwise and allows your agent to continue acting on your behalf even when you are incapacitated. A durable POA terminates only when you die or when a revocation of a POA form is issued.
2. Non-durable POA
A non-durable POA takes effect immediately upon your signature unless the POA states otherwise. It does not allow your agent to continue acting on your behalf when you become incapacitated. In the latter scenario, only a court-appointed guardian or conservator can make decisions on your behalf.
3. Medical POA
A medical POA is sometimes referred to as an advance directive because it allows you to appoint a healthcare agent to make medical decisions for you when you cannot do so. It is limited by your specific medical preferences and any other directive you may have as part of your estate plan, like a living will or a Do Not Resuscitate (DNR) form.
4. General POA
A general POA allocates broad powers to the agent to act on financial, business, real estate, and legal matters. This POA is limited only by the terms set out in the POA or by any relevant state statute.
5. Limited (Special) POA
A limited (Special) POA allows the agent to act for a specific purpose and once that purpose is accomplished, the POA expires.
6. Springing POA
A springing POA takes effect if/when a certain event or medical condition occurs as specified in the POA. It ends at a specified time as outlined in the POA or if/when you become incapacitated or die.
Other Elements and Considerations in Estate Planning in Birmingham and Throughout Alabama
Estate planning also involves considering issues such as life insurance, retirement accounts, and charitable giving.
Life insurance can provide financial support for loved ones after one's passing, while retirement accounts can be structured to minimize taxes and maximize benefits for heirs. Charitable giving can also be an important component of estate planning, allowing individuals to support causes they care about and potentially reduce estate taxes.
Contact a Business Lawyer in Birmingham Today
Estate planning is a critical step in protecting one's assets and ensuring that one's wishes are respected after death. By working with experienced estate planning attorneys, individuals can create a comprehensive estate plan that meets their unique needs and goals. With the right planning and preparation, individuals can leave a lasting legacy for their loved ones and support the causes they care about for years to come. Contact us today to schedule a consultation.