Updated: Jun 9, 2022
Even though all estate planning documents look similar in naming and features, but the intent and the end goal is pretty distinct. Islamic Wills work for many situations but not always the best option to effectively manage your assets while you are alive. While Living Trust works if you like to have full control but there are lots require compare to Last Will. There is no other alternative than Living Will for managing your health care and the Power of Attorney is the best for managing your financial affairs when you are not mentally capable.
Before we go on further details, I would like you to review below questions to help you understand the pros and cons of every option.
If the Testator takes time in making sure estate plans are in place, it would be lots cheaper and easier for an executor to perform his or her affairs after death. If you do not do your work and leave the executor in the bad spot by not having a proper estate plan in place, it would make everyone disappointed including executors, inheritors, community, and lastly most important one is the disappointment from Allah (Subhanahu Wa ta a'ala).
The estate planning is the most ignored by many due to the complexity and confusion we have. Many a time we rate this very low in our priority list.
Estate planning is the process of organizing assets that allow the tax-efficient transfer.
Organize the wealth and other needs for surviving family members upon the death of the person (Create Last Will).
Organize the assets to fulfill the legal, moral, religious obligations.
Plan for orderly business succession.
Plan for managing finances in case of mental incapability. Creating Power of Attorney is one of the best ways to organize yourself and ready for financial needs.
Plan for the end of life wishes in case of mental incapability. Creating Living Will or medical directive can cover your medical wishes.
Estate plans include all your personal and business assets, while succession plans include only business assets. Estate plans may trigger by death while succession plans may take effect during a lifetime and even continue after death.
What is the emotional about estate planning? The leaving of a loved one will be very devastating for family members and so, organizing things and planning in advance can give them relief.
It's not only material wealth portion, instead of your vision to provide care, service, and generosity for your loved one and another relative.
It's also about giving a shape to your boresome, struggle, and hardworking life to the meaning before departure.
It's also visioning the long term goal for your family members who can keep running your flourishing business.
It's usually a time when people avoid making big decisions and so, you can do something in advance so that your family should not be faced with situations that he or she has to crawl for making decisions.
In the lifetime, there are estate planning documents that are created to manage affairs in life while others after death and these documents may include Last Will, Living Will, Living Trust, Power of attorney, Personal or medical directives, Healthcare directive, etc. Depending on the document type, there will be two or more witnesses required to convert into legally binding. Some documents may or may not need notary or lawyer such as las will; however, some may require the notary or lawyer to sign off, for instance, a power of attorney. Document owner, witnesses, lawyer (or notary) must be present and signing off witnessing each other's to make the document to be legally valid. All documents can be revoked and canceled at any time except the irrevocable living trust.
Last Will is a document created by the testator (a husband, wife, or an adult who owns the estate) to express his or her wishes and provide directions to manage the estate's distribution to inheritors. Testators have the opportunity to carry out their wishes regarding wealth, social, religious, or morals. The testator appoints two or more executors in the last will who will come into play after the testator dies. Last Will and Power of Attorney owners of a document must appoint a representative for carrying out affairs during the lifetime. Last will have the representative called executors, while Power of Attorney document has a representative called power of attorney (in General), enduring attorney (in Canada) or an Agent (in the USA).
The personal directive is used to give power to an agent for healthcare, accommodations, to whom you may live or associate, participation in a social, community, educational, employment, or cultural activities or Legal matters. However, the personal directive does not give an agent authority for money, property, and financial issues for which you will need to create Power of Attorney or Enduring power of attorney document. The personal directive is only in effect when you are alive.
Advance (or advance care or Healthcare) directive that allows you to set out how personal care decisions, including health care decisions, are to be made for you when you are not mentally capable of making those decisions. It is only in effect when you are alive and mentally incapable of speaking for yourself. A Personal or Advance (or advance care or Healthcare) directive does not appoint a person to act on your behalf while Enduring Power of Attorney does.
Living Trust is another essential estate planning tool, often confused with Living will. Both documents have minor similarities but do possess significant differences. A living will come into play when—and only when—you can't voice your wishes while Living Trust will be active immediately after you created, though both have the different purposes. A living trust can be used to covers all phases of life including living life while mentally capable or incapable as well as managing estate distributions after death. A living will do much the same thing concerning your health care, and it expresses your wishes at a time when you're unable to do so. One similarity between a revocable living trust and a living will is that both safeguard against mental incapacitation.
A Living Will and Advance directive have the intent to achieve a similar objective in deciding on healthcare-related wishes. However, they have some variations across jurisdictions. Sometimes living Will may be incorporated into an advance medical directive, a legal document that allows you to designate someone else to make health care decisions for you if you're unable to do so yourself. An advance medical directive isn't the same thing as a living will because a living will don't name or appoint anyone else to speak for you. It merely states your wishes in advance and explains under what circumstances you want health care providers to attempt to prolong your life or to cease life-sustaining measures.
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