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Estate Planning 101 Understanding the Basics of Estate Planning
When beginning the estate planning process, it is helpful to have a basic understanding of the most common legal concepts and documents. Below is a brief summary of things you should know. POWER OF ATTORNEY DOCUMENTS Every estate plan should include the execution of two kinds of Power of Attorney documents: A Medical Power of Attorney (MPOA), also referred to as an Advance Directive, establishes who will make medical care decisions on your behalf when you are no longer able to make them for yourself. It also provides you with the option of giving specific or general instructions about the kind of treatment you want to receive. A General Power of Attorney (GPOA) establishes who has the legal authority to make decisions on your behalf when you lack the capacity to make these decisions. The scope of the authority given can be broad or narrow, depending upon your specific situation. The failure to have these documents completed can lead to confusion and conflict. It can also cost you money, either due to unnecessary delay where action is needed or due to legal expenses necessary to sort out disputes which may arise. LAST WILL AND TESTAMENT This is the most commonly understood concept when people talk about estate planning. In its simplest form, a last will and testament details how you would like your property to be divided upon your death.
how the property to be distributed under your will fits into the overall division of your estate, including life insurance policies, pension plans, or 401(k) or other brokerage accounts. UNDERSTANDING PROBATE Probate is the court-supervised process of distributing your property after you die. Whether an estate must go through probate depends upon the type of property owned and how the property was owned. It is important to understand that a last will and testament does not dictate whether your estate will have to go through the probate process. It avoids the up- front costs of a Revocable Trust, which may or may not save money in the long term. REVOCABLE TRUST Also known as a Living Trust, a Revocable Trust is designed to shield assets from the probate process. When a Revocable Trust is established, all of your real property (generally houses, condos, and land) is moved into the Trust. Because the Trust is “revocable,” you, as the Trustee, retain the ability to sell or otherwise manage the property in the Trust. When you
die, the property in the Trust can be distributed outside the probate process in accordance with your wishes. Escaping the probate process avoids expenses including court costs, attorney fees, and personal representative fees. The transfer of property under a Revocable Trust is also private, whereas the distribution and value of any inheritance under the probate process is open to the public. A pour-over will is also necessary with a Revocable Trust. This is utilized to transfer any personal property into the Revocable Trust at the time of your death. If you have questions about any of the above concepts, or you’re ready to move forward with your estate planning, don’t hesitate to contact me by phone at (319) 899-1492 or by email at email@example.com .
-Daniel J. Anderson
The division of your property can be as simple or complex as you desire. You should consider
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