7 Things You Need to Know About Wills and Trusts
What if someone walked up to you and asked the question, “Do you have a will and / or trust?” What would you say? For many of us the answer would be an uncomfortable, “No, I’ve been meaning to do that”. We know we should do some form of estate planning, but it can be intimidating to look at our life and put controls in place in the event we die. Our conscious state and subconscious denial doesn’t want to have to deal with our immortality. For many of us we just don’t know where to start. We put it off for another day, and justify to ourselves that nothing will happen to us, “we are healthy, right?”
What is a will and what does it do for me? Well, the short answer is, it is your ability to control how your estate will be handled when you die. Having a will is one of the most important things you can do for you and your family. A will can protect your spouse, children and assets, and spell out how things will be handled. For those with minor children it includes who the caregiver would be in your absence.
Wills are simple inexpensive ways to address many people's estate planning, but they can't do it all. What doesn’t a will do for you?
A will does not reduce your estate taxes. You may wish to take steps now to reduce tax liability. Many kinds of trusts can reduce or postpone the tax bill.
A will does not avoid probate
A will cannot arrange to care for a beneficiary with special needs.
A will cannot leave money to pets
Both Wills and Trust are devices which you can use to provide for the distribution of your estate upon your passing. Deciding whether a Will or Trust best fits your needs depends on your particular circumstances.
What is your first move? Some may have complicated estates and need to seek the advice of an attorney to set up a proper will and trust to protect their assets. For others a self help website might be all you need to get the process started. There are many websites for the do it yourselfer: www.legalzoom.com; www.nolo.com.Whatever your choice I urge you to start the process of estate planning.
What happens in the event you don’t have a will? If you die without a will, a court will distribute your property according to the laws of your state, this is called Intestate Succession. Who receives what depends on who your closest relatives are. As you can imagine this is not something you want your loved ones to go through. Knowing your wishes and having peace and harmony within the family would be the best gift you could give. Since wills are typically not read, or even found, for days or weeks after a death it may be important to you to leave any special funeral requests in a separate document given to your executor. Although this is no one’s favorite topic, we want to remind you of its importance and hopefully put you on the path to proper planning.
Merriam Webster Definition:
Will - a legal document in which a person states who should received his or her possessions after he or she dies.
Trust – a relationship between parties in which one, the trustee or Fiduciary, has the power to manage property, and the other, the Beneficiary, has the privilege of receiving the benefits from that property. Trusts are often created for the sake of advantageous tax treatment.
Advanced Health Care Directive - an official order or instructions naming another person as agent to make health care decisions for you if you are unable to make your own decisions. The document provides guidance to your family and health care providers’ written direction about your end of life wishes regarding treatment decisions. Link to form: http://ag.ca.gov/consumers/pdf/AHCDS1.pdf