Wills and Trusts
Today you’re vibrant and alive, mentally competent, with a carefree lack of concern for how your financial assets will be distributed when you die. However, what if you fall victim to unexpected or unforeseen circumstances or you suddenly lose your mental faculties, what then?
Establishing a living trust and a last will and testament are ways to plan for the allocation of your estate before you pass on. Estate planning attorneys are indispensable in making certain that wills & trusts are properly written and submitted so that your wishes are accurately carried out. There are essentially three stages in the execution of an estate that has a living trust in place.
Establishing Wills and Trusts
First, establishing a living trust or a last will and testament, is something that needs to be completed under the guidance of an expert estate planner. These are legal documents, drafted by an attorney that specify how your money, property, or other valuable assets are dispersed.
You are the trust maker, unless you choose to appoint a trustee. The benefit of having a trustee or executor assigned comes into play in the event you are deemed mentally incompetent before you actually die.
Having an appointed trustee is not mandatory, but it is recommended. The assignment of trustee responsibilities can be changed, if due to unforeseen circumstances you change your mind. As part of creating these documents, you may also consider appointing a power of attorney to handle cases such as mental incapacity.
Wills & Trusts – The Differences
Wills and living trusts are not the same thing. Each one has a useful purpose in the planning of your estate and should be discussed with a knowledgeable attorney. One difference between the two is when they will actually go into effect.
Your will is the document that indicates your wishes when you die. A will does not become active until at which time you pass away. Wills can only deal with property that is in your name and does not include property in joint title or tenancy.
Trusts however, can be used to disperse property before your death, at the time of your death, or any period afterward. Your trust will be a legally binding agreement between you and a designated trustee.
Trustees can be an individual, or an institution such as a bank, or legal firm. The trustee holds trusts for a designated person referred to as the beneficiary. Trusts often establish a series of two sets of beneficiaries. One set receives the benefits established by your trust during their lives and the other in the event that the original beneficiary dies.
Revocable Living Trust vs. Irrevocable Living Trust
There are two notable differences between a revocable living trust and an irrevocable living trust. When the revocable option is chosen, beneficiaries can be changed or removed, plus the stipulations of the trust modified. Irrevocable cannot be altered except in very rare circumstances.
You may assume that a revocable living trust is always the logical choice. This is not always true, because with the level of control in a revocable trust, also come some disadvantages. If you are sued, assets in a revocable trust are not protected and can be liquidated to satisfy a judgment. Make sure to discuss these options in detail with knowledgeable counsel to select the right option for your specific situation.
Using a pour-over will is also a useful option for you to consider. This is a situation where your estate creates a trust and states that the designated trustee will receive your property in the event of your death. Discuss a pour-over will with an attorney because while they are becoming more commonly accepted, they are not in all jurisdictions.
Having your wishes legally documented before you die, or lose your mental faculties, is critical. Establishing a living trust and a last will & testament before you need them, will relieve your family of unnecessary stress. Drafting your living trust and will using estate planning attorneys avoids the calamity of a sudden mental illness or death occurring, where your affairs go into probate court without an established guideline for the disbursement of your property.
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