Tuesday, December 29, 2015

Easily Misused Estate Planning Terms

Wills and Living Wills

Wills and Living Wills are key parts of any good estate plan. However, though the two sound similar they serve very different purposes. A Living Will states your choices for the kind of medical care you want to receive if you become sick or injured and are unable to talk. A Last Will and Testament, often referred to as just a Will, deals with your property and how you want it distributed if you should die. Therefore, a will is only effective after you die and a living will is only effective before you die and when you incapacitated.

Advance Directive vs Advanced Directive

A Living Will is a type of advance directive. All advance directives are documents a person creates that state what his or her choices are in the event he or she becomes incapacitated or otherwise unable to communicate with other people. Advance directives, such as Living Wills or health care powers of attorney, typically address financial or medical situations and can state specific choices as well as nominate someone else to make decisions on the incapacitated person's behalf.

These documents are referred to as "advance" directives because you make them in advance or in preparation for the possibility that you become incapacitated. Some people mistakenly use the term "advanced" directive, implying that the documents are somehow more complicated or important than others. This is not true, and anyone can make advance directives fairly easily as long as they ensure the documents comply with state law.

Probate Estate vs Trust Estate vs Taxable Estate

An estate is a general term used to describe an area or amount of property. It is sometimes used when referring to assets that are part of the probate estate at someone's death, or assets that are not payable to another person at the owner's death or not part of a trust estate. If an asset is part of a trust estate, then generally the asset will not be part of the probate estate. Further, when considering the taxable estate of an individual for estate tax purposes the IRS will consider the gross estate of the decedent to include the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated. If property is part of a trust estate, it may or may not be part of the gross estate for federal estate tax purposes depending on certain facts about the trust.

Medicare vs Medicaid

Medicare is a federal program attached to Social Security. It is available to all U.S. citizens 65 years of age or older and it also covers people with certain disabilities. It is available regardless of income.
Medicaid is a joint federal and state program that helps low-income individuals and families pay for the costs associated with medical and long-term custodial care. Unlike Medicare, Medicaid has strict eligibility requirements.

Experienced estate planning attorneys Dallas TX of the John R. Vermillion & Associates, LLC offers estate planning and business planning resources to residents of Dallas TX. To learn more about these free resources, please visit http://www.revocabletrusts.com today.
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