Wills & Trusts Issues

Estate planning is the process of designating the distribution of your assets upon your death. It will also determine the management of your assets if you are no longer able to make decisions for yourself. More importantly, estate planning gives you an opportunity to appoint a guardian to watch and care for any surviving minor children. Some of the ways to create an estate plan include making a will or a living revocable trust. 

It’s important to have an estate plan so that your family/friends/business associates don’t spend the next decade fighting in court, and possibly in person. The fights can get even uglier if you have young kids, or lots of money and property, or both.

The main documents for creating an estate plan are a will, revocable trust, durable power of attorney, and advanced health care directive. You do not need each one of these instruments as each situation calls for a specific plan. However, you should be familiar with each type of document to know how they work and the value they bring. An experienced estate planning attorney is best suited to determine the instruments needed for your situation.

If you die without a will, your estate will still have to go through the probate process. However, instead of giving your Executor the go-ahead to distribute your property, the court will name an Executor (known as an “estate administrator”) and will tell that person how to distribute your property.

To begin a probate proceeding, the Executor of the will or an attorney acting on behalf of the estate must initiate the proceeding with the local probate court. This is done by submitting an official document called a Petition for probate of will to the court. The court will review the will and determine whether or not it’s a valid legal document—that is, whether or not the will is legally binding and was in fact created by you.

If the court determines that the will is valid, the court then gives the Executor legal documents called either Letters Testamentary or Letters of Administration. These documents authorize the Executor to distribute assets to beneficiaries. This may include transferring assets from your name into the names of the beneficiaries and paying any debts or taxes on behalf of your estate.

For example, if Susie’s mother dies and she named Susie the Executor of her estate in her Will, then Susie must submit a Petition for Probate of the will to the local probate court. Once the court determines the will is valid, they will give Susie Letters of Administration that authorize her to distribute her mother’s assets.

If you have complex financial arrangements, such as real estate, overseas assets, elaborate investments, or trusts, then you’re going to need some help. This means working with an attorney or an online service that offers advice from real lawyers. The best way to find an attorney isn’t much different than finding a good doctor, electrician, or dog walker. Get recommendations from friends, family, or other attorneys. Once you have some options, meet with them and make sure you get along, approve of their working style and skills, and, of course, don’t forget the price tag.

However, even if you do not have a complex financial situation, an attorney will make sure your intentions are carried out through valid legal documents. 

The first difference between a will and a trust is that a will covers any property that is only in your name when you die. It does not cover property held in joint tenancy or in a trust. A trust, on the other hand, covers only property that has been transferred to the trust. 

Another main difference between a will and a trust is that a will goes into effect only after you die, while a trust takes effect as soon as you create it. A will is a document that directs who will receive your property at your death, and it appoints a legal representative to carry out your wishes. By contrast, a trust can be used to begin distributing property before death, at death, or afterward. A trust is a legal arrangement through which one person called a “trustee,” holds legal title to property for another person, called a “beneficiary.”

Further, a trust is able to pass through probate. This means that, while a court ensures that a will is valid and that the property named in the will gets distributed the way the deceased wanted, a trust passes outside of probate. So a court does not need to oversee the trust process, which can save time and money. A trust, unlike a will, does not become part of the public record. A trust can remain private.

Lastly, a will allows you to name a guardian for children and to specify funeral arrangements, while a trust does not. On the other hand, a trust can be used to plan for disability or to provide savings on taxes, while a will does not.