Do you want to leave money to your favorite charity? To friends? Do you not want people to fight over who gets your beloved plaid lounge chair? Planning your estate allows you to determine what happens to your hard-earned cash and other assets when you pass away.
Will
A will is basically a set of instructions that specifies who gets what assets. You can also stipulate guardianship for a dependent. If you die without a will or other declaration, state law determines how your property is distributed. While the law may be in line with a person’s wishes, often it is not. Even if it is, with a will, probate (the legal process of distributing a person’s estate) is typically a lot easier and cheaper.
If your estate is relatively simple, you may choose to create your own will with the help of a quality software program or book. Make sure you are familiar with your state laws. If you do not follow certain rules or procedures, such as having the proper number of witnesses, your will may not be valid. If your situation is complex or you do not feel comfortable writing your own will, please come to us and we can help. We can help get you connected with competent legal counsel.
Trust
A trust is a legal entity in which your property is held for the benefit of another person. While a will has to be validated as part of the probate process, a trust bypasses probate completely. Many people use one to leave assets to a minor or special needs child. Another situation in which it is commonly used is when a person remarries. A trust can allow the spouse to use the assets while he or she is alive and then pass them on to the children after the spouse’s death.
A trust can be either living, in which the assets are placed in the trust while you are still alive, or testamentary, which is created by a will and only becomes active after death.
Revocable vs Irrevocable
A revocable living trust allows you to remain in control of the assets in the trust. (For example, you can remove them from the trust or obtain income from them.) An irrevocable living trust is a permanent arrangement. Once it is established, you lose the title to the property, and the trust cannot be altered.
As with a will, you can create a trust using software or a book. However, trusts are typically more involved than wills are, so having us help with the proper legal counsel in the process is really a good way to go. Also, since trusts can be costly and timely to set up and maintain, it may be helpful to simply discuss with us to see if a trust would even be beneficial in your situation.
As a side note, having a trust does not necessarily eliminate the need for a will. Most trusts do not cover all assets in the estate. Having a will can ensure that nothing is neglected.
