When it comes to estate planning, wills and trusts are essential tools. A prevailing common misconception regarding this subject is that only the wealthy are concerned with wills and trusts. However, the fact of the matter is that estate planning is a necessary for all people. An estate plan provides the legal mechanism for transferring property upon your death in a manner which recognizes your wishes and the needs of your survivors. For many people it also involves creating a plan which will take care of essential obligations and affairs in case of disability and critical personal medical choices which sometimes must be made towards the end of life. Estate planning is not merely for the prosperous, it is necessity for anyone who wishes to be taken care of in old age and ensure that loved ones are cared for once you pass.
When constructing a will, a person legally defines and declares how their property will be distributed upon their death. A will does not go into effect until the author, known as the testator, dies. Up until their death, the testator can revoke or change their will at any time.
Should you die without a will, it is the responsibility of the state to distribute your property to your heirs according to that state's intestacy laws. The statutes might call for the distribution of your assets and property in a manner that is similar to what you desire. Then again, they might not.
Intestacy statutes only provide how the sum total of your property is to be distributed among your loved ones. It cannot, however, provide for which particular heir will get certain specific items as part of your property. This can often lead to several problems. Your heirs may not agree on who is entitled to certain parts of the estate. For instance, say that you wish to pass a family heirloom such as a wedding ring on to your daughter. Without this desire being expressed within a written will, your son may feel very strongly that his wife should have it instead and it will be impossible for the state to determine who will be the rightful owner of that particular asset. For this reason, even if you do not have many assets, you may be concerned about ensuring that particular items go to specific heirs according to your desires. This is only possible through the creation of a last will and testament.
A will and a living trust differ in some key respects. Some differences between the two include:
Living trusts aren't subject to probate proceedings, they avoid the costs of a second-state probate proceeding where there is out-of-state property, there is no automatic court supervision to handles disputes, and a it will remain private.
Management of your Assets
Wills allow you, as the grantor, to manage the trust assets as long as you are able and make provisions for a successor trustee to take over in your place should you no longer be capable of managing these assets.
It is more expensive to fund, prepare, and manage a trust than it is to prepare a will but it avoids probate costs if all assets were part of the trust.
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