Estate planning is an emotionally charged issue, regardless of your family dynamics. Broaching the subject of financial matters and death can make everyone feel uncomfortable. Yet, it is one of the most important conversations to be had, as the future financial security of your family depends on the planning that you do now. If you have a spouse, children or financial assets, it is important that you engage in estate planning. Both a Will and a Living Trust are useful planning tools and they are often used together. If there is no estate planning done before death, there are laws called intestate succession that controls how your assets are distributed.
What is a Will?
A Will is a document that outlines your wishes for your assets after your death. Without a Will, the court will decide how to distribute your money and property. This can be a costly and lengthy process for your descendents. Creating a Will can give you peace of mind for the parents of young children, as it allows for the naming of a future Guardian, which otherwise would be the decision of the court. It allows for the naming of an Executor, someone that you trust, that can distribute your money and assets to beneficiaries. However, a Will becomes a public record when submitted to the court and anyone is able to read about your property and assets.
What is a Living Trust?
There are two types of Living Trusts; there is a Revocable Trust and an Irrevocable Trust. The Revocable Trust is most commonly used, as it allows for the Grantor (or trust maker) to make changes to the Trust, throughout the remainder of their life. For example, you can transfer additional assets into the Trust or you can change the terms of the Trust at any time. Another advantage of the Revocable Trust is that the successor Trustee can take control of your property and assets if the Grantor is deemed mentally incompetent. In that case, the successor Trustee can manage your property and finances while you are alive.
When you set up an Irrevocable Trust, you are fully surrendering ownership of your assets. This can be useful in some instances, such as Medicaid planning for long term care. When applying for Medicaid for long term care, there is a five year look back of your finances, however this look back excludes any assets in an Irrevocable Trust. The Irrevocable Trust also offers you safety from creditors.
Both types of Living Trusts are private documents and not for public viewing. This can be a desirable option. But the primary purpose of creating a Trust is to avoid probate court. Probate is not required to transfer ownership of your assets. The successor Trustee has legal authority to make all decisions without court involvement.
Should I have both a Will and a Living Trust?
There are advantages to having both of these legal documents. A Will enables you to name a Guardian for your underage children. A Will is also useful if you gain assets and your death occurs without having transferred these assets into the Living Trust. These assets will need to be probated, however your Will can state that forgotten assets after you die, can be transferred into your Trust.
Do I need an Attorney to complete a Will or a Living Trust?
Don’t risk a costly mistake with your loved ones future. There are many complex issues that can arise when completing legal documents, in order for them to be valid. Always have a qualified Attorney looking out for your best interest. Call the Boutty Law Firm P.A. today!