Any individual must make a will or a trust in order to make sure that his or her estates remain in safe hands and are best utilized by those near and dear to them. If you yourself have any loved one who has not created their will or trust yet, you must make an effort to help him or her get started. Depending on his personal requirements and/or the size of his estate, he may choose to create a will, a trust or even both.
Here’s how you can help your friend decide the estate-planning tools that are best for them.
Why opt for estate planning?
Estate planning refers to actively segregating assets and determining how they will be paid out upon your passing. Assets can include personal property as well as any investments or related accounts or capitol.
No matter what the size of their estate, your partner must create a well-drafted will (or trust, or both) to make sure that his assets get distributed to the people of his choosing. Without a valid will, the estate will be divided by the state according to local laws.
Creating a Will
A will is a legal document which contains the direction on how an individual’s assets will be distributed after their death. Your loved one is free to choose how he or she will divide his or her assets – i.e. whether it will be handed over to a single individual or divided among several, or even donated to an organization or charity.
By law, your loved will be required to appoint an executor, who will take on the task of distribution of assets according to the wishes of the deceased. This individual will be responsible for paying dues, filing taxes, and distributing assets. In case your loved one fails to appoint an executor, one will be appointed by the state.
Your loved one is also free to change or even revoke his or her will, provided he is not mentally incapacitated at the time.
Will go through probate, which is a legal process that determines the will’s validity sees to asset distribution – even when a valid will is absent.
Establishing a Trust
While a trust contains the details of how an individual’s assets will distributed upon his or her death (like a will), it enables the granter (i.e. the person creating the trust) to have someone of his manage his assets if he is alive but incapacitated.
Establishing a trust requires the granter to write a trust document and transfer the ownership of his property to the trust. The granter is also responsible for naming a trustee who will manage the trust.
The main point where is trust is different from is will is that a trust comes into effect while you are still living. You can choose to appoint yourself as the primary individual to manage your property on your own, and then designate a successor to manage transactions and distribution of assets once the granter dies or becomes incapacitated.
While irrevocable trusts cannot be amended, revocable ones can be amended at any time so long as the granter is able to do so.