We spend a lifetime building, preserving and managing our estates. Thus, it is only right that we make thoughtful choices about how our estate will be distributed at death. Another critical issue for people with minor children is who will become the legal guardian of the children in the event of an untimely death of both parents. A will is essential to accomplishing these objectives. (Jointly owned assets and named beneficiaries of a life insurance policy or retirement plan will not be affected by the lack of a valid will, unless those named are no longer living.)

A revocable living trust is a trust you create during your life, titling all or selected assets to it which will be managed by a trustee. It is revocable because you can terminate the trust at any time during your life. You can serve as the trustee during your life if you wish. At death, the trust will distribute or continue to manage the assets within the trust in accordance with your wishes. There are some distinct advantages to a living trust. They include:

1. All trust assets will be distributed or managed as you wish at your death and will not be reviewed by the Probate Court, thus saving probate court costs. If you own property in another state other than your state domicile, your estate will avoid being subject to more than one probate court.
2. In your living trust you can appoint a successor trustee to manage trust assets in the event that you can no longer do so. At death, the trustee can continue to manage trust assets for any living beneficiaries for their lives or for a term of years.
3. A living trust will preserve your family’s privacy in contrast to the Probate Court, which has public access.

A living trust is not a device that will save you estate or inheritance taxes, but it can assist you in reducing your estate settlement costs. You can still name and benefit your charitable interests in your living trust. You would use the same kind of bequest language that you would use in a will.

This is a legal document in which you appoint an individual as your "attorney-in-fact" giving that person the legal power to take charge of your financial affairs, even if you should become incompetent or disabled.

This is a legal document in which you appoint an individual to make decisions about your medical treatment in the event you are unable to do so. Such a power is often used in conjunction with a living will. In some jurisdictions, such as New York, the health care proxy must be a separate document appointing a health care agent. It is important to get competent legal advice when preparing all of your estate planning documents, but particularly this document, since it may control your end of life decisions and needs to comply with the laws of your state of residence.

This is a legal document in which you indicate whether or not you would want your life to be “artificially prolonged” in an injury, disease or terminal condition that prevents you from communicating your wishes to medical professionals. Living wills are often used in conjunction with a power of attorney for health care.

As opposed to a living trust which is created during someone’s life, a testamentary trust is created in a will and goes into effect only upon the death of a decedent. The purpose of such a trust is to provide assets and income for someone after your death.

Under the 2010 Tax Act, Congress made substantial revisions to the federal estate, gift and generation-skipping taxes. Under the new rules, federal estate taxes will be charged on all estates worth more than $5 million. However, the new rules are only in effect for 2011 and 2012. Unless Congress acts again between now and the start of 2013, estates worth more than $1 million will again be subject to estate taxes. If you have an estate worth more than $1 million, now is an important time to meet with your attorney, tax professional and other qualified professionals to update your plans.

Depending on which state you live in, your estate may be also be subject to state estate taxes and/or inheritance taxes. It is also important to consider how you attempt to pass IRA or other similar retirement fund assets to children, since these distributions will also be subject to income taxes. For many estates, careful planning is essential to minimize the impact of taxes on the estate. A qualified professional should be able to assist you with this. Finally, any assets you wish to pass on to qualified charities for their charitable purposes will avoid all taxation. In some cases, it's a choice: give some of the value of your estate to the government or to charity. It is your choice if you do the proper planning.