TRUST & ESTATES & REAL ESTATE

What Is A Power Of Attorney?

Here, at the Saba Law Group, LLC, we believe that a power of attorney is far more important than any other estate document. This is because a power of attorney only applies while you are still living while a will is only in regards to how your assets will be distributed once you pass. For most people, knowing they are taken care of while they are still living far surpasses the importance of what will happen to their estate once they die which is why a power of attorney is the absolutely most citical estate planning document you will need.

A Power of Attorney refers to the legal right for an individual or organization to act on your behalf in legal, medical, and/or financial matters.

To give someone a power of attorney, you fill out a legal document that specifically outlines the terms and guidelines for this person, also know as your agent or attorney in fact, is to use the Power of Attorney. In relation to real estate matters, a Power of Attorney is useful for designating responsibility related to a single property or multiple properties. A Power of Attorney document can be used to:

• Decide who looks after the property,
• Determine who’s responsible for paying taxes on the property, and
• Appoint who manages the logistical and financial needs of the property.

A Power of Attorney is a document that is absolutely critical which is why we have created a course that is 100% dedicated to educating consumers, just like yourself, on everything that you need to know regarding Power of Attorneys.

What Is A Trust?

A trust is a fiduciary agreement where the owner of an estate allows their assets to be managed by a third party, also known as the trustee. Trusts are particularly useful for wealth management and investment opportunities.

Trusts are usually custom designed to suit the purpose of the estate and the trustee. They can be designed to handle investments for a living individual, to distribute assets to different parties over the course of time and anything in between.

In a trust, a grantor or property owner creates a legal agreement to give management rights of his or her real estate to a trustee. The trust names those to benefit from the trust (beneficiaries). It also determines how you want your property managed and distributed.

The two main types of trusts are:

– Revocable Trusts: You can make changes to these trusts. If you cancel or revoke the trust, your property assets transfer back to you.

– Irrevocable Trusts: Assets cannot be returned in this type of trust, unless the trustee and beneficiaries consent. Additional benefits come with this choice.

Several types of trusts fall within these two categories. For instance, a living trust is set up while the grantor is alive. On the other hand, a testamentary trust occurs as a result of a will. A qualified personal residence trust allows you to give your home as a gift.

Are There Advantages to Trusts?

The benefits of trusts depend on the type of trust you choose. A professional helps you determine which type works best in your situation. In general, a trust helps:

• Avoid Probate and Delays: The delay, cost and publicity of probate court disappears with properly set up trusts. This means more of your estate gets to your heirs quicker. Placing out-of-state real estate in trust avoids probate there as well.
• Save on Estate and Gift Taxes: Transferring property to a trust puts the real estate in the name of the trustee. This removes it from the grantor’s estate for tax purposes. Well-developed estate plans save on estate taxes.
• Privacy. Trusts are not a matter of public record. They’re managed by private parties, like lawyers, banks or wealth management companies.
• Protect From the Unexpected: A trust does more than carry out your wishes after you die. Naming a successor trustee also manages your assets should you become unable to do so. In the event of illness or injury, your assets remain protected.
• Protect Against Creditors: Property in the name of the trustee keeps your real estate from creditors and lawsuits. Creditors seeking payment from the grantor or beneficiaries have no claims to it.
• Give You Control: With trusts, you decide the who, when, where and how of asset distribution after your death. When set up properly, a trust gives you assurance your property goes to the heirs you choose.

The Importance of Updating Your Estate Documents

Simply put, you need to update your estate documents anytime you have any significant changes that occur (i.e. marriage, divorce, remarriage, death of a beneficiary or the birth of a child) since this will usually impact the way you would want your assets handled upon your death. Otherwise, your wishes are likely to go unfulfilled if the wording of these estate documents are not aligned with the manner in which you hold title on the properties.

As such, an important concept to bear in mind is that a deed of a property will trump a will. Therefore, if there is a discrepancy between what your will suggests how a property will be divided versus how the property is titled on the deed, the deed will take precedence. This is why you updating your estate documents immediately following a property sale or purchase works best. This simple action avoids unwanted situations later. Reviewing your estate documents every few years ensures nothing has been forgotten or overlooked.

As you can see, the importance of having estate documents as they relate to your real estate holdings is absolutely critical. It is equally important to continue to update your estate documents to reflect any purchase or sale ensures you get the final say on where your real estate investments go, not the courts.