When creating your estate documents, you need to determine which documents best fit your situation. Wills, trusts, living wills and powers of attorney could save you money and will help your heirs save money if you become incapacitated or when you die.
Will vs. Trust
Both documents are used to give your assets to those of your choosing after you die. However, a trust doesn’t usually provide for personal items, wherein a will does. In most cases, it’s beneficial to have both documents. Larger items, such as vehicles, are usually placed in a trust. In some cases, your home may be placed in a trust.
If you have a small estate, you may not need a trust. However, a living/revocable trust is funded with your assets during your lifetime. Should you become incapacitated due to an accident or illness, the trustee, or successor trustee if you named yourself trustee, will be able to continue managing your assets just as you would have. In many cases, the trust keeps creditors, nursing homes and medical facilities from depleting your estate.
If you die with just a will, your assets are not automatically passed to your heirs, nor could they be managed by someone else if you become incapacitated. Furthermore, a will allows your assets to become public record, but a living trust keeps your assets private.
In many cases, you may be able to avoid probate if you have a trust. In some cases, a will may allow you to avoid probate. This depends on the types of assets you have and whether your friends and family contest your will.
If you die intestate – without a will – you will have to go through the probate process. If you die testate – with a will – your heirs may be able to avoid the probate process. With a trust, your heirs have a better chance of avoiding the probate process. You want to try to avoid this process at it could become costly. And, it does take time to go through the process. Because of the cost and time it takes, probate adds another stress to the stress of loved ones at this time.
Of course, there is always a catch. If you create a living trust, creditors have two years to file claims against your estate. Until that time is up, your trustee cannot fully pay out the trust. However, if you do file probate, the two-year waiting time is reduced to three months. But, if you do file probate, then you end up having that cost anyway.
When determining whether you should create a living will, keep in mind the time frames, and whether your heirs will have to or want to file probate. In most cases, if you do have a lot of assets, it’s always best to create a trust and a will, as a trust is an excellent estate management tool – especially since you can’t see into the future to know if you are going to be become incapacitated.
Simplified Probate and Trusts
While you should always have a will, even if you don’t own real property or other large assets, you may not need a trust. If your estate is valued at less than $75,000, your heirs may be able to file a simplified probate proceeding, which makes having a trust an expense that you could avoid.
The Bottom Line
When creating your estate, if you have real property or a large number of assets, you should create a will, some type of trust, living will and a power of attorney. The will ensures that your assets are passed to those you want to have them. A living trust allows you to manage your assets while you are living and lets the trustee manage them if you become incapacitated. The living trust also facilitates the giving of your assets after your death.
A living trust instructs your doctors when they should revive you and continue life-giving treatments, such as a ventilator to keep you alive. And, a power of attorney allows a beneficiary to conduct legal transactions on your behalf. Depending on how the power of attorney is drafted, a beneficiary could buy and sell real estate, file bankruptcy on your behalf, and conduct other legal matters.
Contact France Law Firm
Regardless of your age, contact France Law Firm for help in determining which estate documents are best for your situation. Even if you are very young, it’s not to early to create your estate documents.