Life and Estate Planning – Part III

Wills and Trusts

With the New Year already in full swing there is no better time to start planning for the future now. The Life and Estate Planning series has been a basic guideline, intended to provide useful information on common issues and goals encountered by a typical individual or family. So with this final installment, which covers Wills and Trusts, I encourage you to make sure you have proper Life and Estate Plan in place this year to ensure your loved ones and property will be properly cared for and managed in the event of your death.

Living Trust (Inter Vivos Trust): The Living Trust is one of the main ways to avoid probate. It allows you to place the legal title of your assets in Trust while you are alive. You or someone in whom you have confidence manages the property, usually for the benefit of you or your family. Most people name themselves trustees, keeping full control over all property held in trust.

A Living Trust also allows you to name a successor trustee to take over management of your assets in the event you become incapacitated or upon your death. That way, your assets will continue to be managed as you want with no interruption.

Last Will and Testament (“Will”): A Will is a legal document that allows you to direct how your estate will be administered and distributed. By exercising your privilege of making a Will, you can accomplish numerous personal and financial objectives. A will address three primary issues after your death: (1) Who gets your “estate” (beneficiaries); (2) Who administers your estate (executor), who will take your assets through probate and make final distributions to your heirs; and (3) Who cares for your minor children (guardian).

If you die without a Will, a state court will choose an administrator for your estate or, if needed, a guardian for your minor children. The court’s choice may or may not be individuals whom you would have selected. The court-appointed administrator will distribute your property according to the state intestacy laws, regardless of any desires you may have expressed during life. Your children, grandchildren, or other heirs who are minors at the time of your death may automatically receive their shares of your estate outright when they reach the age of majority, whether or not they are experienced enough to manage their inheritances wisely.

Despite what you may have read or heard, a Living Trust can”t always fully replace a Will. Any property you don’t or cannot place in a trust, such as jewelry, will be distributed under state intestacy law if you die without a Will. With a clear expression of your wishes through a Will, there are unlikely to be any costly, time-consuming disputes over who gets what.

Testamentary Trusts: A Testamentary Trust, is a blend of the Will and casino pa natet the Living Trust as it is a trust made within a will. A Testamentary Trust is often created for the benefit of a minor. Unlike a Living Trust, a Testamentary Trust doesn’t go into effect until death. The executor of your Will must fund the Trust as part of the probate process. Therefore, it does not avoid probate. However, the benefit of a Testamentary Trusts is that there is court oversight and all of your property can be distributed in one document.
Regardless of the methods you chose, remember that Life and Estate Planning is a lifetime process that must be updated periodically.


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