Without planning, your estate may be split among ALL of the children of both marriages, or may go to your second spouse and she can decide where it goes.
Most people understand that having some sort of an estate plan is, as Martha Stewart would say, a “good thing.” However, many of us don’t take the steps to get that estate plan in place because we don’t understand the nuances between wills and trusts – and dying without either.
Here’s what will generally happen if you die, intestate (without a will or trust), with a will, and with a trust. For this example, we’re assuming you have children, but no spouse:
After that, state law will decide who gets what and when.
Keep in mind that since your death has been published to alert valid creditors, it’s not uncommon for predators (fake creditors) to come forth and make demands for payment – even if they’re not owed anything.
The bottom line? Dying intestate allows state law and the court to make all the decisions on your behalf – regardless of what your intent might have been. Publicity is guaranteed.
The bottom line? While a court oversees the process, having a will allows you to tell the court exactly how you want your estate to be handled. But, a public probate is still guaranteed.
You’ll have named a trustee to manage your estate with specific instructions on how your assets should be dispersed and when.
You do still need a will to pour any assets inadvertently or intentionally left out of your trust and to name guardians for minor children.
The bottom line? Trusts allow you to maintain control of your assets through your chosen trustee, avoid probate, and leave specific instructions so that your children are taken care of – without receiving a lump sum of money at an age where they are more likely to squander it or have it seized from them.
Don’t let the will versus trust controversy slow you down. Call the office today; we’ll put together an estate plan that works for you and your family whether it be a will, trust, or both.
Sarah and John Smith did a great job of organizing their life and getting an excellent estate plan in place. They put the originals in a safety deposit box. But, they forgot to give access to their appointed personal representative. They also did not share where the key was. The personal representative could not get into the box to get the original will and trust so that the estate could be distributed. Nor could she get the original will to get the judge to order the box opened.
In a safe place. But what is a safe place?
First, it is somewhere your agents named in your power of attorney, trust, and will can find them. Your representative should know where the documents are and have access.
If they are kept in a safety deposit box, your representatives should have access and a key to the box.
If they are kept in your home, then make sure your representative knows where they are and how to get to them. If in your home, preferably in a fire proof box.
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Here are 10 reasons, & a half, that estate planning is a total waste of time for you.
(Warning: satire ahead)
Congratulations, starting today, you have been chosen to know your exact date and time
Until then you will never be sick. No accidents. No incapacity. No dementia.
You have no reason to plan. Nothing will ever happen to you, so there will never be a time when you need help making decisions. You will never have a stroke. You will never develop dementia. No times where you need a little help.
You know the exact moment and can put things off until just a few weeks before.
Your children are completely responsible and good at handling money. They will not blow a large lump sum. They won’t travel, have parties, buy cars, and invest in things that lose value rapidly. No financial predators will call on them, ever.
You can leave them that large life insurance settlement without worry. They will be completely responsible in managing it. They don’t need any help or restraint in managing the money.
They will invest the money at a good rate of return. They will leave the principal alone, and live off the interest. They will put aside for their retirement years.
It doesn’t matter how good they get along now, your kids (unless you have an only child) will fight over $5 trinkets. Emotions run high.
Even with an only child, cousins will probably want something and fight for it.
Perfectly valid. If you don’t own anything, owe anybody, or even rent an apartment, then you don’t need a plan, at least for the end.
Without proper planning, you are going to pay more estate tax than you have to.
Okay, the exemption is around $5,000,000 right now, but that could change anytime. In 2016 the President has asked for the exemption to be lowered to $3,500,000 and the tax rate increased to 45%.
Probate is not a joyful experience for most people. For most people, it borders on emotional torment.
Probate is not free either. You must want to cost your children at least 6% of the GROSS estate.
If you are the last of your line, and no relatives can be located, then your estate will default to the state.
Your marriage will last forever without strife or divorce. You don’t need to worry about your spouse’s next marriage giving your hard work away to somebody other than your children.
Your children will never get divorced and have to give half of their inheritance to their ex-spouse.
Something that only takes 4 to 8 hours of your time can’t be that important or that good.
Surely if estate planning were really worth it, you would have to put in 100’s of hours of effort.
Something that says it can protect me during my life, protect my children from the foster care system, and protect my family after my passing must be snake oil.
You don’t need to waste the time, energy, or money needed to create a plan. After all, nobody really needs a plan for all the reasons listed above.
Without a will or trust, the courts will make the final decisions as to how to distribute your estate. With a plan, you decide. This is just one of the benefits of trusts in estate planning and the benefits of tax planning. Combined with the benefits of financial planning, and you have a great overall plan.
Trusts allow you to avoid probate, minimize taxes, provide organization, maintain control, and provide for yourself and your heirs. In its most simple terms, a trust is a book of instructions wherein you tell your people what to do, when.
While there are many types of trusts, the major distinction between trusts is whether they are revocable or irrevocable. Let’s take a look at both so you’ll have the information you need:
Revocable Trusts. Revocable trusts are also known as “living trusts” because they benefit you during your lifetime and you can alter, change, modify, or revoke them if your circumstances or goals change.
Irrevocable Trusts: When irrevocable trusts are used, assets are transferred out of the trustmaker’s estate into the name of the trust. You, as the trustmaker, cannot alter, change, modify, or revoke this trust after execution. It’s irrevocable and you usually can’t be in control.
As experienced estate planning attorneys, we can help you figure out whether a revocable or irrevocable trust is a good fit for you and your loved ones. Call us today to set up a meeting.
Personal circumstances and/or the law could change so that a presently irrelevant provision may become relevant and/or applicable in the future.
Starting with a longer robust document and possibly tailoring the document to meet the personal cosmetic preferences of the client enables a higher quality document.
It is better to start with as complete a document as possible and then consider eliminating provisions that might be clearly unnecessary.
Personal circumstances and/or the law could change so that a presently irrelevant provision may become relevant and/or applicable in the future.
A provision in one section of the trust that may appear irrelevant or unnecessary may have been purposefully included in the document for purposes of other sections.
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You can elect a guardian to raise your children instead of letting the courts decide without your input.
We understand that it feels hard to get around to estate planning; it sounds about as fun as getting a root canal. However, we also understand that we all want to make sure that our loved ones are protected and receive our hard-earned assets – regardless of whether we have $10 million or $10,000.
Don’t let these common roadblocks stop you from protecting yourself and your family:
The truth is that estate planning isn’t really that bad. In fact, with our help, estate planning is easy. We’ll chat with you about your goals and concerns, analyze your family and financial situation, and work with you to come up with a solid plan. You provide the information, which we always keep confidential, and we’ll take care of everything else.
Jody sues Jerry over a few words in a will because Jody thinks she should get all of the property. The judge makes his ruling. Jody does indeed get it all in spite of the desire of the testator to split it evenly. Now, every trust and will has to have language added to cover this case.
Blame our lawsuit happy society. Every time a lawsuit is decided, language needs to be added to the documents to answer the questions that came up in the lawsuit.
It is also much better to define terms in the documents and spell out powers and responsibilities as much as possible. That way, the documents are not so specific to a particular state.
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Another great benefit of estate planning is that the person is able to protect the inheritance of his or her children in the event that his surviving spouse gets remarried after his death with someone who has children. If the will is planned carefully then the inheritance of the children is protected while the surviving spouse is still provided for. By doing this, the worry factor about the children or stepchildren from a later marriage claiming the part of the estate is been eliminated. An estate attorney knows how to make sure your belongings go to your children only.
Considering the myriad of trusts available, creating an estate plan that works can seem daunting. However, that’s what we, as estate planning attorneys, do every day. We know the laws and will design a plan which addresses your specific situation.
Here’s a look at the basics of ten common trusts to provide a general understanding. There will not be a quiz at the end. All you need to do when we meet is share your goals and insight into your family and financial situation, we’ll design a plan that incorporates the best documents for your situation.
There are many types of trusts available. We’ll help you select which trusts, if any, are a good fit for you. Call today. We’re waiting to hear from you.
Leo’s parents passed after a car accident when he was 18 years old. Leo really did not have a lot of life experience managing money. However, his parents had a $1,000,000 life insurance policy that he was the beneficiary of. Leo took a lot of trips (first class of course), bought gifts for his friends, bought a sports car, etc. At the end of two years Leo had a used sports car, no education, and the start of a large debt load.
If you think that sounds out of the ordinary, the average for a lawsuit settlement is 2.5 years until spent. This is regardless of the size of the settlement. Why should an inheritance be any different?
The answer is to put the money into a trust that guides how the money is to be spent until a person matures and has more experience in managing money. One of the author’s favorites is to pay children an allowance and for education until they reach a more mature age.
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Everyone has heard of wills and trusts. Most articles written on these topics, however, often presume that everyone knows the basics of these important documents. But, in reality, many of us don’t – and with good reason – as they’re rooted in complicated, centuries-old law.
Let’s face it, if you’re not an estate planning attorney, these concepts tend to remain merely that – concepts. So, if you’re “fuzzy” about wills and trusts, know that you are not alone. After we show you the difference between these two documents, we’ll tell you why a trust is the better choice.
Wills vs. Trusts: Defined
Let’s take a minute and define both “will” and “trust”:
Will. A will is a written document that is signed and witnessed. A will is considered a “death” document as it only goes into effect when you die.
A will:
Trust. A trust is a legal document, signed and witnessed, and effective during your lifetime, during any period of disability, and after death. Because the trust is effective during your lifetime and you can change it, it’s referred to as a “living” document.
A trust:
The Probate Process: A Key Element in Deciding Between a Will and Trust
One key element in deciding between a will and a trust is understanding the probate process. The term “probate” – which literally means “proving” – refers to the process wherein a decedent’s will must be authenticated, outstanding legitimate debts paid, and assets transferred to the beneficiaries.
The downside is that probate can take a long time – even years – it’s expensive in many places and the entire process is completely public, meaning your nosey neighbor Nancy and evil predator Paul both know exactly who got what and how to contact them. In virtually all cases, the only upside of probate is that creditor claims are cut off.
The Bottom Line on Wills vs. Trusts
HOW TO DECIDE: As everyone’s situation is different, it’s important to analyze every aspect of your situation – and what the future may hold – so that you can determine what’s right for you and whether probate avoidance, incapacity planning, and trust protections have value to you and those you love. Most people receive the greatest overall benefit from having a trust.
ACT NOW: Without an estate plan in place, you and your family are left completely unprotected. Call our office now and we’ll help you determine whether a will or a trust makes sense for your situation. You don’t have to make these decisions alone.
Confused about the differences between wills and trusts? If so, you’re not alone. While it’s always wise to contact experts like us, it’s also important to understand the basics. Here’s a quick and simple reference guide:
What Revocable Living Trusts Can Do – That Wills Can’t
What Wills Can Do – That Revocable Living Trusts Can’t
What Both Wills & Trusts Can Do:
WARNING: There is such as a thing as irrevocable trusts, which cannot be changed without legal action.
While some of the differences between wills and trusts are subtle; others are not. Together, we’ll take a look at your goals as well as your financial and family situation and design an estate plan tailored to your needs. Call us today and let’s get started.
You may have some heirs who are inexperienced when it comes to managing their inheritance.
If such is the case then the inheritance may not be long-lasting and it might be spent on impractical things. By doing the planning beforehand, a person will be able to specify that what the inexperienced heirs should do with the assets which they have inherited to make sure that it is used for getting important things like good education, a nice house, making wise investments and others. Estate planners know how to implement estate law to protect them from themselves.
