Why Are Wills and Trusts Necessary?
The Basics of Will and Trusts:
You know you need a will, but do you need a trust? And what does either of them have to do with a financial plan? Does your financial advisor have the right experience to most effectively help you?
To answer those questions, let’s back up a little. If you die without a legal will or trust, then the state will decide what happens to your property–and to your minor children, in the event their other parent is not able to care for them. No one wants to think their wishes won’t be honored after they die, and that’s where wills and trusts come into play.
A will, as you probably know, is a legal document stating your wishes in regard to your property and guardianship of your minor children after you die. A living trust, on the other hand, is a legal arrangement you create yourself while you’re alive; under a living trust, a trustee holds legal title to the beneficiary’s property. You can be both the trustee and the beneficiary while you are alive. Upon your death, the trust passes to a successor trustee you have determined, and he or she is responsible for the disposition of your property according to your wishes.
So what’s the point of putting all your property into a living trust for which you are the trustee and the beneficiary?
Simple: A living trust keeps your estate out of probate. When you die with a will in place but without a living trust, the will goes into probate. In probate, all your property must be inventoried and appraised, debts and taxes must be paid, and only then can the remaining assets be allocated according to your will. A living trust completely eliminates that costly and time-consuming legal process (unless you have property you haven’t put into your trust, in which case, only that property will go into probate).
Your attorney can help you decide whether you need a revocable or irrevocable living trust, and he or she can also help you with your will. Once those are established, keep the paperwork in a safe place–and make sure your successor trustee and executor both have access to it.
Disclaimer: AllFinancialAdvisors.com does not give legal advice.
Always consult your attorney before making any legal decisions.
Search by STATE for Financial Advisors with Estate Planning expertise. These financial planning professionals will be able to review your personal situation and help you connect with a local attorney (if you do not currently have one).
Tags: Estate Planning, financial advise, Financial Advisors, financial plannning, financial plans, trustees, trusts, wills