Most adults do not have an estate plan even though they know they should. We know it is a topic that is unpleasant to ponder, but it is something that, unfortunately, must be thought about seriously. And if you keep avoiding it until the inevitable, then you set up those you hold dear and/or any heirs for potential hassle and heartache, as the courts step in to determine what is best rather than you.
The good news is that, through some fairly simple estate planning, you can draft legal documents that outline your wishes and make life much easier for your loved ones after you pass.
However, not all estate planning is the same, and it is important to understand the difference between wills and trusts in order to determine what type of documentation works best for your situation.
What is a will?
This is a basic, legally-binding document that spells out how you want your assets – financial and material – distributed following your death.
A will allows you to appoint executor – also referred to as an executrix or personal representative – to help facilitate the action of the will. It also allows you to name your beneficiaries (those whom you want to receive funds or possessions), designate guardians for your children, and leave specific instructions as to how and when your beneficiaries receive their inheritances. This procedure will also help your beneficiaries resolve any outstanding financial liabilities upon your death.
What happens if I die without a will?
Frankly, it can cause big problems for your loved ones, as this situation may add both time and strife to the settlement of your estate, and you don’t get to decide how your assets are distributed – the state does.
This is referred to in legal terms as “dying intestate.” Dying without a will means that the probate process kicks in and the courts will decide how to distribute your funds and possessions, and until that decision is made, your assets will be frozen. It also means that, should you have any children young enough to require a legal guardian when you pass, the courts will determine who takes that guardianship. Suffice to say it is a situation that all parties would rather avoid.
And it is something easily avoided.
How do I obtain a legally-binding will?
In order to be valid a will must be submitted to the probate court governing the region in which you live. In other words, a will is not something you may simply draw up on your own and expect it to stand up to legal scrutiny.
The good news is that filing a will with probate is a simple procedure, as the judge is simply examining the document to assure that it is legal and valid. Yet understanding how to ensure that this occurs may mean that you should pursue the aid of an estate attorney that specializes in drafting wills, among other estate documents.
The drawing of wills – especially if your wishes are relatively simple and straightforward – is not an especially expensive or time-consuming procedure, and an estate planning lawyer will also be able to clear up any questions you may have regarding the process.
Estate planning attorneys can also help you if you have more complicated or more specific financial desires – specifically by designating trusts, which do not necessarily spell out your last remaining wishes but are designed to protect the assets of your estate and will certainly remain binding posthumously.
What is a trust?
Much like a will, a trust can designate where you want your estate’s assets directed. Unlike a will, however, a trust is much more limited in scope, as this is its sole intention. A trust cannot direct your final wishes in terms of your children’s guardianship, for instance.
Trusts are recommended for anyone with significant assets, but they are valuable tools that can be used by anyone!
A trust is also a legally binding entity. However, it is not filed with probate, so it allows you to keep details of your finances private – wills are public record, trusts are not. Another significant difference between trusts and wills is that, while a will is enacted after your death, a designated trustee may become legal owner of designated assets the moment the trust is created – though this may continue on past your death as well. Take, for instance, an irrevocable trust. An irrevocable trust cannot be revoked once it is created, so whatever is linked to that trust will always be linked to that trust.
What are the advantages of a trust?
As already mentioned, trusts allow for much more privacy in the details of your estate planning. They also allow you much more detail in how you want to distribute your finances. A trust may also offer you protection from creditors or potential litigants.
Yet perhaps the number one advantages of trusts are related to tax law. For instance, the first $11.4 million in assets ($22.4 million for a married couple) of a trust are not subject to estate taxes. A trust also allows for the gifting of an additional $11.4/$22.4 million tax free. So, as you can see, it can provide quite a shelter for those with significant assets.
How do I obtain a trust?
There are many different types of trusts each with various benefits and drawbacks, and a qualified and experienced estate planning attorney can help you determine what type of trust is right for you and build a customized plan that is right for you and in the best interest of your loved ones.
Do not keep waiting – plan now!
You never know what might be waiting around the corner, so while it might not be something you want to think about, estate planning provides the ultimate plan for the future – one that can make life so much easier for those you leave behind. In fact, neglecting that certainty is something to be avoided at all costs.
If you are interested in estate planning, need to write your first will, modify an existing one or establish a trust, please seek professional assistance. The experienced at Elder Law of Georgia is always happy to guide you through the process to ensure you and your loved ones are prepared for the future while minimizing cost and stress. Please contact us today at 678-971-4971 to get started.