Wills & Trusts
What is a Will?
A will is a legal document that directs how your property will be distributed after your death. It specifically defines who will inherit your assets and can appoint guardians for minor children. It will include the appointment of an executor, (many times a close family member or an attorney), who is responsible for overseeing that your wishes are carried out as specified. It is typically less expensive to set up than a trust, and is regulated by the state. Therefore, if you move to a different state, you may need a new one.
A will does not take effect until after your passing. At that time it will go through probate, a court-supervised process of validating the will and distributing assets. Sometimes this process can be costly and time-consuming. It is also a public process, something to consider if privacy is a concern.
What is a Trust?
A trust is a legal arrangement where a trustee (person or institution) holds and manages assets for beneficiaries, based upon rules that you have set. It can take effect while you’re alive (Revocable Living Trust) or after you have passed (Testamentary Trust). A trust allows you to specify how and when assets are distributed to your beneficiaries (such as immediately, at certain ages, or in installments) and can also manage your assets if you become incapacitated. Many people will choose a trust in order to avoid the time and expense of probate, possibly minimize taxes, and to maintain flexible control over how their assets are used.
When a person has a unique need not met by a general will, a trust may be
the solution. Some common scenarios that may require a trust would be
owning property in more than one state, living in a state with burdensome
probate laws, reducing taxes, or to meet the needs of a beneficiary with
special circumstances. A discussion with an estate planning attorney will help
you determine if a trust is right for you.
Wills vs Trusts
To recap, here are some differences between wills and trusts.
INSERT PHOTO HERE
In addition, keep in mind that many people utilize both vehicles, adopting a will to name guardians and to handle things not in the trust, and a revocable living trust to manage assets smoothly and avoid probate.
Durable Financial Power of Attorney
A durable financial power of attorney is a legal document that allows someone you have appointed (your agent) to act on your behalf to handle your finances should you become unable to do so. The document is durable in that the authority remains in place even after you have become incapacitated. This will protect you from situations where you may become incapacitated suddenly and unexpectedly.
One of the most important decisions you will make in your estate planning journey is naming your agent. Make sure it is someone that you fully trust and who will keep your best interest at heart. It is a good idea to have a discussion with this person and make sure they are agreeable to the responsibility.
After selecting your agent, you can select what powers you want to bestow to them in your document. Some common examples include filing your taxes, paying your bills, managing real estate assets, investing your money in stocks and bonds, and running your business if you have one.