Why should I go to the trouble of writing a will?
A will lets you control what happens to your property. If you have minor children, a will enables you to designate the best available person to care for them after your death. Through a will you can nominate a legal guardian for your children and name an executor to handle the distribution of your estate to your designated beneficiaries.
What happens if I die without a will?
If you die without a will, your property still must be distributed. The probate court in your area will appoint someone (who may or may not be the person you would have wanted to comb through all your affairs) as the administrator of your estate. This person will be responsible for distributing your property in accordance with the law of your state.
The probate court will closely supervise the administrator’s work and may require the administrator to post bond to ensure that your estate will not be charged with the costs of any errors made by the administrator.
Of course, this involvement may be much more expensive than administering an estate under a will, and these costs come out of your estate before it is distributed. Some of your property may have to be sold to pay these costs, instead of going to family or friends.
Who gets my property if I die without a will?
By failing to leave a valid will or trust, or failing to transfer your property in some other way before death, you’ve left it to the law of your state to write your “will” for you. In the absence of a will, the law of your state has made certain judgments about who should receive your property. Those judgments may or may not bear any relationship to the judgments and decisions you would have made if you had prepared a will and/or executed a trust.
Does a will cover all my property?
Probably not. It is easy to think that a will covers all of your property. But because property can be passed to others by gift, contract, joint tenancy, life insurance, or other methods, a will might best be viewed as just one of many ways of determining how and to whom your estate will be distributed at your death.
The various methods of distributing your estate are discussed in this section. In the meantime, keep in mind the kinds of property that a will may not cover and include them in your estate planning.
Where should I keep my will?
Keep it in a safe place, such as your lawyer’s office, a fireproof safe at home, or a safe deposit box. If you do keep your will in a safe deposit box, make sure to allow the executor to take possession of the ill when you die. Also, keep in mind that some jurisdictions require a decedent’s safe deposit box to be sealed immediately after death until certain legal requirements have been satisfied.
What other estate documents should I keep with the will?
You should also keep a record of other estate planning documents with your will, such as trust documents, IRA’s, insurance policies, income savings plans such as 401(k) plans, stocks and bonds, and retirement plans.
What is a trust?
A trust is a legal instrument used to hold and manage real property and tangible or intangible personal property. Examples of these are antiques (tangible personal property) or the right to royalty payments (intangible personal property).
Putting property in trust transfers it from your personal ownership to the ownership of a legal entity called a “trust” which holds the property for your benefit or the benefit of anyone else you might name. There are several different types of trusts that may be beneficial, depending upon your own individual circumstances and estate planning objectives.
What is a living trust?
A living trust is simply a trust established while you are still alive. It can serve as a partial substitute for a Will. Therefore, upon the death of the person creating the trust, his or her property is distributed as specified in the trust document to beneficiaries also specified in the document.
There are three parties to a living trust:
- the creator of the trust (also referred as the grantor, settlor, or donor);
- the trustee (the person who holds and manages the property for the benefit of the creator or other beneficiaries);
- and one or more beneficiaries (the person or persons named to receive the benefits of the trust).
Why do people use trusts?
The reasons vary. Parents, for example, might use a trust to manage their assets for the benefit of their minor children in the event the parents die before the children reach the age of legal adulthood.
The trustee can decide how best to carry out the parents’ wishes that the money be used for education, support, and health care. Others may use trusts to avoid inheritance taxes or to place assets out of the reach of potential future creditors. A trust is an excellent method of managing your property and assets after you have died so that your loved ones are still taken care of in your absence.
Can you change a trust after you set one up?
It depends. A trust can be revocable, that is subject to change or termination; or irrevocable, that is difficult to change or terminate.
A revocable trust gives the creator great flexibility but no tax advantages. An irrevocable trust is by design less flexible, but offers considerable tax benefits. It’s wise to consult with an estate planning attorney before you proceed to explore the benefits and costs of a trust.
Should I consider setting up a trust?
Most likely, yes. While it may depend on the size of your estate and what you want to do with it, trusts provide various benefits to even moderate estates.
For example, if you are primarily interested in protecting yourself in the event you become unable to manage your estate, a revocable living trust is a good option. It can avoid the expense and delay of a court hearing on your mental or physical condition and the appointment of a legal guardian to oversee you and your estate in the event you are declared legally incompetent.
If you want to provide for minor children, grandchildren, or a disabled relative, a trust might be appropriate. Before making a decision, consult an estate planning lawyer.