No one likes to think about what happens after their own death, but it’s important to protect and make sure your loved ones are taken care of. You’ve worked hard to acquire your wealth over the years. Whether you pass down your estate to your children or other family, or donate it to a charity of your choice, you should be able to have some control over what happens to your wealth after you pass away. There are a many different tools to ensure your estate is handled the way you would like, including a Will or a Revocable Living Trust, depending on your needs or the complexity of your estate. The great thing about a Will is that it doesn’t need to be complicated or time consuming. If you are single, or are just starting a family and or career, and have minimal assets, a Will is an effective document to have. If you have a blended family, diverse or considerable assets, or simply want to avoid probate, a Revocable Trust may be the most effective plan.
No matter how many assets you have, an estate plan that includes a Will or a Trust is the best way to make sure your wishes are carried out.
What is a Will and Trust?
A Will is a written legal document that specifically instructs how your property and other assets will be distributed after you die. You can amend the Will or Trust at any time during your lifetime. A Revocable Living Trust can be created and active during your lifetime, managed by you, the Grantor, and upon your death or incapacity, the Trustee takes over and distributes your estate according to your plan.
Why do you need a Will or Trust
You want to be clear about what you want done with your possessions after your death. If you are not clear, your loved ones could be left guessing as to what you wanted. Having a Will or Trust avoids extra stress on your loved ones by clearly answering the questions of who will receive your estate, what they will be receiving, and when they will receive it. This also includes being able to make donations to any charity or cause of your choice. A Will or Trust reflects your personal values and interests and that includes any gifting that you would like to do with your wealth.
Even if you have a Will, your estate will need to be probated, but having a Will speeds up the probate process by informing everyone on how you would like to distribute your assets. Having a Will allows the court to know how you want your estate distributed as opposed to having the court decide for you, which can cause a delay in distribution of assets and payment of debts.
A Trust can avoid probate, is a private document and can be created and managed by you during your lifetime. Typically payment of debts and distribution of assets takes less time than going through probate.
Who enforces the Will or Trust?
When you create a Will, you will be asked to name a Personal Representative (also called an Executor). This person is in charge of enforcing your instructions laid out in your Will. A person who does this when you have a Trust is the Trustee.
What about children and pets?
You are able to name a guardian for your children in your
Will or Trust. If you do not do so, the probate court will decide who will care for your children. If you have pets, you can also give direction as to who will care for them after your death and if that person will receive any compensation.
What information should you include in a Will or Trust?
As you think about creating a Will or Trust, there are some things to consider. The first is the Personal Representative (executor) who will be responsible to make sure your possessions are distributed according to the instructions you put in your Will or Trust. The second thing to think about is all of your assets and property that will be included in your Will or Trust. Any outstanding debts or taxes that you have will be taken out of your total assets before the rest is distributed to your beneficiaries. Beneficiaries are those people or organizations who will receive your assets from your estate. A guardian is the person (or persons) you would choose to care for your children. You might not have all of these in your Will, but it’s good to use this as a checklist to start.
What happens if you don’t have a Will or Trust?
If you don’t have a Will or Trust and pass away, your property and assets will go through probate court and the court will decide how to distribute your assets according to the state laws of intestacy. How the state distributes your assets might not be what you prefer. If you elect to have a Revocable Living Trust prepared, and the Trust is properly funded, your estate will not need to go through probate court.
Can you change a Will or Trust once you have one?
Life circumstances change all the time, which is why you can amend your Will or Trust at any time while you are still alive and able to do so.
How do you get started creating a Will or Trust?
Now that you have a basic idea of what a Will and Trust are and what they include, you can get started. It’s important to have an attorney work with you on preparing this legal document to make sure your estate is distributed the way you intended it to be.
If you have any questions or concerns regarding Wills, Trusts, Probate or Estate Planning, or the information in this article, please contact Timothy H. Knecht of Cline, Cline & Griffin, P.C. at 810-232-3141.