Creating a will is the most basic form of planning, but its terms are simple and mainly involve an individual’s belongings. In Missouri, residents use other forms of planning to protect their estates.
Purpose of a will
A will describes the planned outcome of your assets after you die. The document explains where your belongings will end up and includes a list of beneficiaries to inherit them. Despite the details provided in a will, it is not the only document used in estate planning.
Power of attorney
A will indicates the future state of your assets, but it does not indicate the future status of your health if you become incapacitated. A power of attorney is a healthcare arrangement that instructs a medical provider, family member or close companion to make serious healthcare decisions on your behalf if you become too sick or injured to function.
A revocable living trust is a plan for the management of your assets during your life and after death. Unlike a will, it is used to avoid having the estate go through probate and to reduce estate taxes.
Grantor retained annuity trust
A grantor retained annuity trust (GRAT) is made to eliminate taxes on large gifts that you send to family members. A trust is created in which your assets are entrusted. An annuity is paid each year by the grantor, and once it’s paid off, your beneficiary receives the funds with virtually no gift taxes. The GRAT is an alternative to transferring assets without taxes.
A will is fundamental to estate planning. There are other arrangements that may be included, such as a trust or power of attorney. Each plan is made to ensure the security of your health, family and personal belongings during your life and after death.