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Both Wills and Trusts are
devices which you can use to provide for the distribution
of your estate upon your death. Deciding whether a Will
or a Trust best fits your needs depends on your circumstances.
A living Trust is a popular alternative to the traditional
Will, but you should weigh the advantages and disadvantages
of each before deciding on one form or the other.
|
Will |
Living
Trust |
Probate |
Subject
to probate proceedings.
Out -of-state
property requires probate proceedings in that
state, as well.
Provides court supervision
for handling beneficiary challenges and creditor
disputes.
Becomes public record
at the time of your death. |
Not
subject to probate proceedings.
Avoids the cost
of a second-state probate proceeding where there
is out-of-state property.
No automatic court
supervision to deal with disputes.
Remains private. |
Tax
Savings |
Same
tax saving provisions available as are available
in a Trust. |
|
Management
of your Assets |
In
addition to the Will, must use a Power of Attorney
or Conservatorship to manage assets. |
Allows
you as the grantor to manage the Trust assets
as long as you are willing and able.
Makes provisions
for a successor trustee to take over in your place. |
Costs |
Costs
less to prepare a Will than a Trust. Cost to probate
a Will can be substantial. |
Costs
more to prepare, fund and manage a Trust than
to prepare a Will. But avoids probate costs if
all assets were held by the Trust. |
What does a Will do?
A Will is the legal document
that allows you to distribute your property to those you
choose. A Will allows you to designate beneficiaries to
receive specific items from your estate, and other beneficiaries
to receive everything else. For example, if you want your
house, your car, or your antique thimble collection to
go to a certain person or organization, you designate
that person or organization as the beneficiary.
Who's going to make sure
that your antique thimble collection goes to the proper
person? The executor of your Will. The executor's the
person you designate to carry out your wishes.
A Will also gives parents
of minor children the chance to nominate a guardian. The
court makes the final decision when appointing a guardian
for your children after your death, but the court will
usually accept your nomination. A guardian's legal
responsibility is to provide for your child's physical
welfare.
What does a Living Trust
do?
A Will comes into play only
after you die, but a living trust can actually start benefiting
you while you are still alive. A living trust is a trust
established during your lifetime. It is revocable, which
allows for you to make changes. You will transfer substantially
all of your property into your living trust during your
lifetime, and any omitted assets can be transferred into
the trust at the time of death through the use of a simple
Pour-over Will. You should always make a Pour-over Will
at the time that you establish your trust.
A living trust will be used
as the mechanism to manage your property before and after
your death, as well as provide how those assets, and the
income earned by the trust, are distributed after your
death. If you should become incapacitated or disabled,
the trust is in place to manage your financial affairs,
usually by a successor trustee, if you were serving as
trustee. A living trust is not subject to probate, and
therefore, all provisions of the trust will remain private.
Joint living trusts are also
possible. They simply combine the assets of a husband
and wife into a single trust, governed by a single trust
document. However, if estate tax minimization is important
(for combined estates which will exceed $625,000), the
joint living trust must be very carefully drafted with
the help of an attorney in order to achieve the desired
goals.
What happens if I don't
have a Will or Living Trust?
The legal term for dying without
a Will is dying intestate. If you do not specify through
a valid Will or Living Trust who will receive your property,
state law controls and generally distributes your property
to your spouse and/or your closest heirs. This may or
may not be what you intended. Furthermore, if you fail
to nominate a guardian for your minor children, the state
could appoint someone you don't trust as a legal guardian
of your minor children. Finally, by failing to appoint
someone to carry out your wishes, the state can appoint
anyone to be the administrator of your property, and the
administrator may have to pay certain fees or post a bond
at the your expense.
At Munley,
Munley & Cartwright, our goal is to provide exceptional legal services to our
clients. We strive to achieve the highest standard of excellence for the
protection of individual rights through team work and the use of our
considerable resources and experience. For a free consultation regarding
your legal concerns, please submit the below, or call us at:
1-800-318-LAW1
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