The end of the year is a great time to review and evaluate the important things in your life, including your personal legal affairs. The few hours invested in your future financial security and health are well worth the time and effort. Here are some of the indispensable components of every family’s legal security plan. Make sure you review it now so it won’t be forgotten during the holiday celebrations and you can start the New Year worry-free.
Review your housing plan. Many times having a shared title in your account is not enough. Depending on your circumstances, you may need a trust to avoid leaving the burden of probate to your family. A living trust allows you to transfer assets to a trust but you retain control and are able to manage or revoke the trust. The trust allows you to choose a successor trustee and decide who will receive the assets upon your death. After your death, courts do not need to be involved and probate is not required. Trusts can help you if you’ve been disabled by accident or illness because a substitute trustee can manage trust property without lengthy litigation.
Set your “life wishes” or health care directives. “Advanced health care guidelines” allow you to select the most appropriate person to handle decisions about your health care (including life-sustaining care) should you become disabled. The Federal Health Insurance Portability and Accountability Act (HIPAA) makes strict regulations on the privacy and release of personal medical information. It is therefore important that you include certain language in your directive that identifies your personal agent as your “personal representative” with the authority to obtain your medical information for HIPAA purposes.
Decide how your property is titled.How you title your property will affect your overall real estate plan. There are 4 basic forms of property ownership:
- sole proprietorshipwill give you exclusive control over the property, but the downsides include the lack of a heavier tax burden and a will when the owner dies. Most sole proprietors use this title method because they don’t know a better alternative.
- Co-tenant with the right to survivewill automatically pass to the living owner at the time of death and not through your will or trust. However, the surviving owner is not required to share the property with other family members.
- Same tenantwould allow each owner to own a certain unequal share. Your share of the property will pass under the terms of your will. Again, this will involve probate.
- Whole rentalis real property owned by husband and wife, each of which has undivided property, plus inheritance rights, so that at the time of death one of the heirs is entitled to the share of the heir.