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Wills And Trusts

 
HELPING YOUR LOVED ONES CREATE THEIR WILLS AND TRUSTS

HELPING YOUR LOVED ONES CREATE THEIR WILLS AND TRUSTS

 

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.

 

WILL vs. LIVING TRUST – WHICH ONE SHOULD YOU CHOOSE?

WILL vs. LIVING TRUST – WHICH ONE SHOULD YOU CHOOSE?

 

If you want to assure the safety of your assets after your death and want your survivors to get a financial support system it, you must have a written legal document which mentions the directions to distributing your assets post-mortem. Which is where the fundamental question arises: What should you go with? A will, or a living trust? Most of the American population (around 80%) have wills, and a much smaller percentage have living trusts.

Often called as a “revocable” or an “inter vivos” trust, a living trust is a legal document which allows you to place your assets in a “trust.” This trust will first offer you benefits while you are alive and will be transferred to your designated beneficiaries after your death. The transfer itself will be done by a “successor trustee,” who will be a representative of your choosing.

A will, on the other hand, is a legal document that has the directions on how your wealth must be distributed after your demise. The process itself is carried out by an “executor” (who will be named in the will), who will be able to carry out his or her duties only after you die.

Who should you join? The 80% or the much lesser 20%? Here are three compelling reasons why you should opt for a living trust:

 

You won’t need Probate

This is arguably the best advantage of having a living trust. Having a valid will for your estate will subject it to go through probate i.e. a series of court proceedings whose purpose will be to distribute your assets according to your directions by the executor. A living trust, however, does not have any such requirement, and therefore can allow you to distribute your assets to your heirs much faster – weeks as opposed to months (or even years) in case of a will. The successor trustee will be responsible for paying your debts and distributing your assets according to your wishes.

 

A living trust may help save money

While this is true for the most part, how much you will save depends on your particular financial situation. Initially, drafting a living trust will cost more than a will, since the former is a more complex document. Further expense will be required in transferring your assets (like certificates, stocks, bank accounts, and bond accounts) to the trust, which will be done through separate paperwork – creating and funding a trust requires more than simply “writing it up.” The living trust, however, will save money during the time of its execution (especially after your death), as there will be no need for it to go through probate (which is a costly procedure that is carried out in case of wills).

 

A living trust offers privacy

If you prioritize privacy in matters of your estate and assets, this can be a crucial factor. While a will is (by law) a public record and has all of its transactions made public as well, a living trust is private, and has your estate distributed in private upon your death. A living trust also includes your out-of-state property (if you have any), and avoids it going through probate.

 

CONFUSED BETWEEN WILLS AND TRUSTS? HERE’S WHAT YOU REALLY NEED TO KNOW

CONFUSED BETWEEN WILLS AND TRUSTS? HERE’S WHAT YOU REALLY NEED TO KNOW

 

Practically everyone has heard of the terms “will” and “trust,” and knows the context in which they are used. However, most people assume that they are one and the same – which is far from truth. In reality, these two documents and their functions are very different. While they are both estate planning devices and are very useful, they serve different kinds of purposes, to the extent that they can be used in conjunction to make a wholesome estate plan.

To start with, let’s take a look at the basic definitions of the two documents – while a will is a document that consists of directions in which your wealth and/or assets should be distributed after your demise, a trust can be used to distribute them before death or during the period of death (or even afterwards – but that’s up to you). While the will becomes active after only after your death, the trust will come into effect the moment you create it. By law, a will requires the presence of a legal representative who will see to the implementation of your wishes after your death. A trust, on the other hand, requires no such thing. A trust is generally arranged between a person (or institution, like a law firm or a bank) – known as the “trustee,” and the person who stand to receive the property – called the “beneficiary.” Trusts generally have 2 types of beneficiaries – those who receive income from the trust when they are alive, and those who receive the leftover amount after the death of the first set of beneficiaries.

Another key difference between a will and a trust is the kind of property that they cover. While a will covers only that property which is in your name at the time of your death, it does not include any property that is held in a trust or even in a joint tenancy. On the flip side, a trust can only cover property which has been transferred to it; therefore, the property must be put in the name of the trust in order to be included in it.

By rule of law, a will is supposed to pass through probate, which means that it’s administration will be overseen by a court of law, which will make sure that the will remains valid and the all the directions on it are followed according to the wishes of the deceased wanted. A trust, on the other hand, passes outside probate, and therefore does not need the supervision of a court (or the extra time and money that goes along with it. It is also for this reason that a trust can stay private unlike a will, which will ultimately become a part of public record.

Deciding which is the best option for you can be tough, since each of them have their own advantages and disadvantages and their usefulness (or lack thereof) is dependent upon your unique situation. To get the best of yours and your survivors’ interest, you must make a proper consultation with your lawyer and financial advisor.