Most people have heard the terms “will” and “trust,” but not everyone knows the differences between the two. Both are useful estate planning devices that serve different purposes, and both can work together to create a complete estate plan.

One main difference between a will and a trust is that a will goes into effect only after you die, while a trust takes effect as soon as you create it. A will is a document that directs who will receive your property at your death and it appoints a legal representative to carry out your wishes. By contrast, a trust can be used to begin distributing property before death, at death or afterwards. A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to property for another person, called a “beneficiary.” A trust usually has two types of beneficiaries one set that receives income from the trust during their lives and another set that receives whatever is left over after the first set of beneficiaries dies.

A will covers any property that is only in your name when you die. It does not cover property held in joint tenancy or in a trust. A trust, on the other hand, covers only property that has been transferred to the trust. In order for property to be included in a trust, it must be put in the name of the trust.

Another difference between a will and a trust is that a will passes through probate. That means a court oversees the administration of the will and ensures the will is valid and the property gets distributed the way the deceased wanted. A trust passes outside of probate, so a court does not need to oversee the process, which can save time and money. Unlike a will, which becomes part of the public record, a trust can remain private.

Wills and trusts each have their advantages and disadvantages. For example, a will allows you to name a guardian for children and to specify funeral arrangements, while a trust does not. On the other hand, a trust can be used to plan for disability or to provide savings on taxes. Sheri Abrams, Attorney at Law, can tell you how best to use a will and a trust in your estate plan.

©2012 Virginia Disability Law Blog. All Rights Reserved.

If no Executor/Executrix is named in a will, a Probate Judge will appoint one. Probate refers to the legal procedure for the orderly distribution of property in a person’s estate. The Executor/ Executrix files the will in probate court, where a Judge decides if the will is valid. If it is found to be valid, assets are distributed according to the will. If the will is found to be invalid, assets are distributed in accordance with state laws.

Responsibilities usually undertaken by an Executor/Executrix include:

– Paying valid creditors;

– Paying taxes;

– Notifying Social Security and other agencies and companies of your death;

– Canceling credit cards, magazine subscriptions, etc.; and

– Distributing assets according to the will.

©2012 Virginia Disability Law Blog. All Rights Reserved.

A health care power of attorney allows you to appoint someone else to act as your agent for medical decisions. In general, a health care power of attorney takes effect only when you require medical treatment and a physician determines that you are unable to communicate your wishes concerning what that treatment should be.   Appointing someone to serve as your agent helps ensure that your medical treatment instructions will be carried out.

While a health care power of attorney serves to appoint an agent to speak for you, you can also use it to give the agent guidance about your medical wishes.  Following are some issues that can be addressed in a health care proxy:

•The name of the person authorized to act for you. It is good to appoint an alternate as well.
•Whether or not you want to be kept alive by machines if you are in a persistent vegetative state.
•Under what circumstances you want pain medication to be administered.

Whatever choices you make, you should take time to consider your health care wishes before signing a health care power of attorney.  For this reason, signing a generic hospital form may not a good idea, as many of these forms will not take your individual wishes into account.

Also bear in mind that if you already have a health care power of attorney as a part of your estate plan, the generic form will revoke your more personal health care power of attorney.

A qualified attorney, such as Sheri Abrams, can help you create a health care power of attorney that addresses your particular situation. You can then take this document with you to the hospital and have it made part of your medical records.

©2012 Virginia Disability Law Blog. All Rights Reserved.

One scenario that often arises has to do with “HIPAA” regulations. HIPAA, which stands for Health Insurance Portability and Accountability Act of 1996, is the primary federal regulation governing a patient’s private medical information. HIPAA gives a patient the right to manage his/her medical information and regulates who can access that information. Because medical providers must follow HIPAA regulations, it is difficult for caregivers who legitimately need to access another person’s medical records, often in an emergency, to do so without a health care power of attorney that authorizes the information’s release. Under HIPAA, doctors in these situations can disclose medical information to patients’ families, but they are not required to do so without a release from the patient.

Parents of children with special needs often bump into these restrictions for the first time when their child reaches 18 and obtains his/her own right to privacy under HIPAA. If the child is not under guardianship, either because he/she does not require it or because no one has obtained it, it may be hard for a parent to obtain information from a doctor or hospital without some form of HIPAA release from their child. In these cases, it is important for the child to execute a valid health care power of attorney and living will, if they are able to do so. The health care power of attorney and living will not only allows access to medical records, but will also provide that the child’s wishes are carried out if he/she ever requires serious medical care.

Another case for estate planning involves adults with an episodic illness. These adults may be perfectly functional and rational 99 percent of the time, yet they are completely disabled when their illness does strike. Having a functional health care power of attorney and Financial Power of Attorney allows an agent to help a person with an illness manage his/her affairs when necessary, without having to obtain an emergency guardianship when that person falls ill.

Finally, there are people with cognitive disabilities who require assistance only with certain tasks but who are perfectly capable of making estate planning decisions, including the choice of who receives their property.

Attorney Sheri Abrams can help you or your family member create these important documents, and can also recommend additional ways to carry out other important estate planning goals.

©2012 Virginia Disability Law Blog. All Rights Reserved.

Dying without a will is called dying “intestate.” Each state has laws that determine what will happen to your estate if you don’t have a will.  If you are married, most states award one-third to one-half of your estate to your spouse, with the rest divided among your children or, if you don’t have children, to other living relatives such as your parents or siblings.  If you are single, most states provide that your estate will go to your children or to other living relatives if you don’t have children. If you have absolutely no living relatives, then your estate will go to the state.

Note that any jointly held assets, such as bank accounts or houses, will go directly to the co-owner. In addition any life insurance policies or retirement accounts will go directly to the beneficiary designated on the account. And if you have a trust, any assets in the trust will go to the beneficiary designated in the trust.

One purpose of a will is to name a guardian for your young children; if you do not have a will, the court will determine who will act as guardian. The court will also appoint the person who will administer your estate. In addition, if you are unmarried, but have a partner, your partner will not inherit anything from your estate without a will naming him or her as a beneficiary.

The best way to ensure your estate is distributed the way you want it, is to plan your estate with an experienced Attorney such as Sheri Abrams.

©2012 Virginia Disability Law Blog. All Rights Reserved.

©2012 Virginia Disability Law Blog. All Rights Reserved.