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Wills FAQ’s -- Frequently Asked Questions
Question: I’m too young (too poor, not married etc.) to need a Will aren’t I?
Answer: People offer all sorts of excuses for why they have yet to create even the most basic estate plan. The simple truth is that every adult can benefit from, and have some kind of estate plan in place. At a bare minimum, executing a Last Will & Testament and who will inherit them on your death and will decrease the possibility of expensive, potentially destructive litigation after your death.
Question: Should I use a Will or a trust to distribute my estate assets?
Answer: In every case, a person should at least have a Will. Even when someone has a Living Trust, they also need a Will as not all of a person’s assets will or may be in a person’s Trust on their death. Some assets should not be transferred to a trust. Not everyone, in my opinion, necessarily needs a Living Trust. Whether you should have a trust depends on several considerations, including your marital status; whether you have a life-partner or are in a second marriage; whether you have minor children or children that, although over 18 years of age, have not completed college or vocational school; whether you have a disabled child or an elderly parent who needs support; the type and value of your assets; and many other considerations. These are important considerations and should be discussed with an experienced estate planning attorney to determine whether a Will alone will be sufficient for you, or whether a Trust should also be a part of your estate plan.
Question: What is a Trust?
Answer: A trust is created when the owner of property (the settlor) transfers that property to someone else as trustee to hold and manage pursuant to a trust agreement or declaration of trust, for the benefit of a beneficiary (usually the settlor or settlor’s family members). A living trust is a trust that you establish during your lifetime. You and/or your spouse can be trustees for yourselves under a Declaration of Trust, in which case you and/or your spouse are both the trustees and the beneficiaries of the trust. Unless you provide otherwise in the document, a living trust can be amended or revoked by you at any time before your death.
Another form of trust is a testamentary trust, which is a trust that is established under the terms of your Will and does not take effect until your death. Whether you should create a living or a testamentary trust is also something that should be discussed with an experienced estate planning attorney.
Question: What does a Trustee do?
Answer: The individual who holds the trust property is the Trustee. In general, a Trustee is responsible for administering the trust assets protecting and investing trust assets, and distributing those assets after your death. In practice, however, the duties and responsibilities of a Trustee are often diverse and complex. One of the most common mistakes Settlors of a trust make is to name someone as their Trustee without first gaining an in-depth understanding of what will be required of the Trustee and the skills and abilities a Trustee needs to properly administer the trust. Also, if you are naming someone else as trustee for yourself during your lifetime, and are naming an individual as trustee for the trust beneficiaries who survive you, you should discuss with that person whether they are willing and are able to act as trustee for you in you can no longer act as trustee, or as trustee of the trust after your death.
Question: Why might I need a trust in my estate plan?
Answer: The flexible nature of a trust is one reason that trusts are so often found in an estate plan. Among the numerous and varied estate planning goals that can be furthered using a trust are:
- Probate avoidance: Assets held in a living trust on the settlor’s death are not subject to probate administration.
- Privacy: A will is a public document that must be filled with the clerk of the probate court after death and can be read by anyone. A living trust is private and is not required to be filed with the court.
- Incapacity Planning: A living trust may eliminate the need for the appointment of a guardian for your estate if you become disabled due to a mental or physical condition.
- Special Needs Planning: A property drafted special needs trust for a disabled beneficiary who is receiving public benefits such as Medicaid, can provide funds for the disabled beneficiary’s extra and supplemental needs and prevent that beneficiary from losing those public assistance benefits.
- Managing Distributions to beneficiaries and Protecting the inheritance of a minor child: Do you really want your child to inherit money and property from you when they reach 18 years of age? A living trust can give the trustee authorization to use trust assets for the care, support and education of the child, even for years after they become an adult. You direct in the trust document at what age or ages your child’s share will be distributed to him or her.
- Asset Protection: While you may not be able to prevent you own creditors from attaching your assets by garnishment or other legal proceedings, a trust’s spendthrift provisions can protect your children’s interest in the trust from their creditors while the assets remain in the trust.
Other Estate Planning goals a trust may be used for include:
- Medicaid planning
- Charitable gifting
- Tax planning
- Pet planning