Wills & Trusts

Wills tell a person's family or heirs - and the courts - how that person wanted to distribute his or her money and property. A will is the most basic estate planning tool, and a current and valid will is the best way to make sure your goals are met and your family is taken care of after you're gone. Many people opt for a trust as part of a will, or as an estate planning method of its own. A trust sets up a means to control property that is put under its authority. The person who makes and funds the trust uses the trust document to specify how the trust assets should be managed and who should receive benefits. Whether you want to prepare your first will or you are interested in updating your estate plan or exploring trusts, a skilled estate planning lawyer can help you tailor a plan to your needs.

Wills

A will tells the world how you want your property to be distributed when you pass on. You may name your family, friends, distant relatives, charities, or other recipients. You can also use your will to give other types of instructions, such as naming a guardian for your kids and specifying an executor for the estate. The named guardian will be the person who will raise your children if you die before they are adults - a named guardian can refuse the responsibility, so it's important that whoever you name has agreed to the role. The executor administers the will and makes sure your directions are followed as closely as possible. If your will has to go through probate court, your executor will be involved in that process. The role involves considerable responsibility and time, so you should choose your executor carefully.

Preparing a will is not enough. Because the laws change - and because your financial and familial circumstances change as well - you should review and update your will with your attorney. A regular review will ensure that your will still does what you want it to do. Many wills don't include new spouses, later-born children, divorces, or deaths of named beneficiaries. A will can be updated by a newer will, or by drafting a codicil, which is an amendment to a will. Wills and codicils must be drafted and witnessed in specific ways to be valid; your attorney can advise you on the relevant rules.

Trusts

A trust legally transfers property or assets to a trustee, who then manages the property for the beneficiaries of the trust. Trusts enable the person creating the trust (the trustor) to determine who receives what benefits from the trust when. Trusts are either "living" trusts or "testamentary" trusts - living trusts are established during the trustor's life, but testamentary trusts take effect when the trustor dies. If a living trust is created, the trustor can either make it revocable (he or she can take back the property in the trust, thereby ending the trust) or irrevocable (trustor cannot end the trust). The following is a brief description of commonly used trusts, but there are many others to discuss with your attorney.

• Revocable Trusts. This is a trust that can be changed by the trustor at any time prior to death.
  
  
• Irrevocable Trusts. This is a trust that cannot be changed, once established, except by court action.
  
  
• Living Trusts. A living trust operates during the life of the trustor and may include some or all of the trustor's property and assets. One of the biggest advantages of a "living trust" is the substantial tax benefit to the trustor. Assets placed in an irrevocable living trust are not attributable to the trustor (although the trust itself may be taxed). A living trust may also allow estate taxes to be avoided.
  
  
• Testamentary Trusts. A testamentary trust becomes effective only upon the trustor's death and the trustor may make changes to its terms any time before that time. For many people, retaining control of their property is an important goal that testamentary trusts help them achieve.
  
  
• QTIP Trusts. QTIP stands for Qualified Terminal Interest Property. It is a type of marital trust that postpones estate tax payments until the death of the second spouse. These taxes may be higher after the second death, but the surviving spouse would receive more use from the assets in the meantime.
  
  
• Generation Skipping Trust. This trust allows most assets to go to a trustor's grandchildren, but provides the income from the trust to the trustor's children. Basically, the estate goes directly to the grandchildren, but the use of the income is available for their parents. Current laws impose a tax on generation skipping transfers in excess of a certain amount. These trusts can be complicated and require the assistance of a skilled estate planning attorney.

Conclusion

There is no one-size-fits-all approach to estate planning. An estate plan needs to be tailored to the particular needs of each individual by an experienced wills and trusts attorney who understands the various options and your personal goals. An experienced estate planning attorney can help you determine how wills and trusts can help you achieve your dreams.

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DISCLAIMER: This site and any information contained herein in intended for informational purposes only and should not be construes as legal advice. Seek competent legal counsel for advice on any legal matter.