Estate Planning With Wills and Trusts

26
June

After a person dies, the assets will need to be distributed. It’s understandable that people will want to decide who will receive their property, and they can do this if they have a will or a trust set up before they pass away. Even more important matters can be addressed, such as who is going to raise the minor children who are left behind. If people do not plan for these things with wills and trusts, the people left behind may see very difficult times ahead of them.

What Is a Will?

A will spells out the wishes of the person who has died. Among these wishes can be who the children’s guardians are and who will receive what from the deceased’s property. If the deceased were to die without a will, it would be up to the court to disburse assets, and this has been known to cause family fights of seriously large proportions. By drawing up a will, people avoid the need for their survivors to act badly after their passing.

The Process of Probate

When a person dies, the estate will need to go through probate. During this process, it is ensured that all of the deceased’s wishes are executed as outlined in the will. Sometimes, this process advances without any mishaps. Other times, survivors dispute what is written in the will, and it is during the probate process that these issues will be resolved.

The Living Will

Wills do not only handle people’s assets after they have died. A living will is the legal document where people can let it be known what they would like to be done medically in the event that they are incapacitated. For example, if people know that they would not like to have heroic measures performed on them if they are declared to be in a vegetative state, they can have this written into a living will so that the doctors and family members know exactly what to do and what not to do.

What Is a Trust?

With a trust, people will transfer their assets from their ownership to the trust before their deaths or at the time of their deaths. With the assets in a trust, the property will not be subject to probate and the estate taxes that the survivors may have been required to pay. Some people also like the idea of their final wishes not being in a public record as they would be if the assets were left in a will.

Revocable Trust

Three types of trusts people can draw up are revocable trusts, irrevocable trusts and testamentary trusts. What prevents some people from forming a trust is the fact that they will not be the owners of the property once the transfer takes place. With a revocable trust, the trustees can retain ownership of the property and can change any of the conditions that they set at any time as long as they are mentally competent to do so.

Irrevocable Trust

An irrevocable trust is the opposite of the revocable trust, as would be imagined. When people transfer their property into the irrevocable trust, they are no longer the owners of the property. The trust will retain ownership, and the person who set up the trust will never be able to make any changes whatsoever.

The Testamentary Trust

The testamentary trust is the type of trust that will be put into place after the person has died. This trust is set up according to the person’s will.

People have several options for how they will have their assets handled after they have passed away. If they don’t know which option is the best, they can consult with an attorney who can help them.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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