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Estate Planning 101: A Glossary

Wills

A legal document declaring your wishes regarding the distribution of your property after death. A Will can also nominate a person to act your as the legal guardian and conservator for you, or for your minor children should something happen to you and your spouse. Generally, a Will must be probated with the court unless your total estate is valued under $100,000. Furthermore, a Will offers no planning for disability.

Living Will / Healthcare Directive

A legal document indicating preferences or directions for the administration of medical care when you are not able to do so yourself, especially the withdrawal or withholding of life-sustaining procedures in the event of a terminal illnesses or prolonged unconsciousness.


Trusts 

In general, an estate planning tool intended to avoid legal expenses involved with probate, which simplifies and protects your estate, and keeps your estate plan and personal assets a private matter. Trusts can also provide for the best interests of surviving spouses and/or minor children.


Executor
You will need to name an executor and one or more successor executors. The role of the executor is to identify and gather all assets, identify all debts and potential claims against the estate, safeguard and protect assets, including any real estate and investments, carry out the provisions in the Will for distribution of assets, payment of expenses, claims, taxes, if any, and debts, account for all services, and, finally, distribute the balance of the estate. 

Guardian
If any minor children are involved, a guardian may be nominated for appointment by the Court if the spouse does not survive. naming a guardian for a minor child is one of the more important motivating factors for parents doing or redoing their wills. Generally, a guardian for a minor child can be named only in a will and is effective only when both parents are deceased. A guardian can be named in a separate written instrument that is executed with the same formalities of a will. The guardianship ends when the child attains the age of majority in the state that has jurisdiction of the child (for example, in Pennsylvania the age of majority is 18). If the child is considered disabled because of a serious physical, mental, or emotional condition, the guardianship can be arranged to continue beyond the age of majority. If you merely name a “guardian,” then the named person will have the responsibility to oversee both the financial and personal affairs of the child. These two roles can be legally separated by naming both a “guardian of the estate” and a “guardian of the person.” Therefore, you can name two different persons, each having separate responsibilities, one for “estate” matters and the other for “personal” matters. The guardian’s role is to act in your child’s best interests and is accountable to the court. Whether you split the estate and personal roles will depend on your options and comfort levels of available people resources. 


Financial Power of Attorney
A general durable financial power of attorney creates legal authority for another person to administer your assets in the event of your unavailability or incapacity. It is called “durable” because it survives in its authority even if you become legally incompetent. It usually contains broad powers to manage assets. It can also be used to name the guardian of your person and estate. 


Medical Power of Attorney
A medical power of attorney names an agent to make healthcare decisions on your behalf if your are unable to make your own healthcare decisions — the agent is a “surrogate decision-maker.” The healthcare power of attorney can set standards for life support and restrictions on healthcare. It can also name a guardian for your person. A healthcare power of attorney differs from a living will declaration in that it is effective for decisions other than terminal care decisions. A medical power of attorney is often used in lieu of a will living declaration. 


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