CENTER FOR ESTATE PLANNING
Wills and Trusts
A will is a document prepared by an estate planning attorney, which states how a person desires to have their assets distributed upon their death. The will is one of the basic planning tools and is one of the ways to make sure that your property is distributed according to your wishes and that your family will be taken care of after you are gone. The will should be reviewed from time to time when changes are appropriate. Whether you are preparing your first will, desire to have changes made to an existing will, or exploring the use of trusts in your estate plan, an estate planning lawyer can help you develop a plan that will suit your needs.
A will is the one document that is filed with the court after you pass on. The will dictates how you want your property to be distributed after your death. It can name your family, friends, other relatives, and charities as beneficiaries under the will. The will is also used for other types of instructions, such as appointing a guardian for your minor children and naming an executor who will handle your estate. A guardian is important to make decisions regarding your children’s health, education and upbringing. It is a good idea to talk with the proposed guardian prior to naming them in the will, as it carries with it a lot of day to day responsibility, as the children would be living with the guardian. The job of the executor is also time consuming, as the executor has to follow the terms of the will, sell or distribute assets, file tax returns for income taxes and estate taxes, to name a few jobs. It is important that the executor you plan to name understands the responsibilities that go with the job.
It is important to update your will periodically, due to changes in the law, your financial circumstances, your family circumstances, and to conform to changes in your objectives over time. These changes may be things that have taken place after the date of the original will, such as divorces and remarriages, births and deaths of named beneficiaries, guardians or executor. A will can be changed by a document known as a codicil. Both the will and codicil have certain formalities set forth by statute, which include how it is drafted and witnessed. Your estate planning attorney can make sure the will is properly and correctly drafted and the way that it is signed complies with the law.
The most flexible vehicle, and the cornerstone of many estate plans is the trust. A trust is a legal entity that holds assets for the benefit of a person. The person who creates the trust is known as the settlor. At times, the settlor is also called the creator, donor, grantor or founder. The trust document lists the terms for the management of the trust, the beneficiaries and under what circumstances distributions of income and principal are made. The person who is in charge of the trust is called the trustee. Many times the settlor is also the trustee. Once the trust document is prepared and signed, the settlor then transfers money or other property into the name of the trust, which is called funding the trust. If the trust is funded, it may be called a living trust.
A trust can be created, take effect and be funded during the settlor’s lifetime or upon the settlor’s death. A trust that is created, becomes effective, and funded during the settlor’s lifetime is known as an inter vivos or living trust. A trust that is created by a will and becomes effective upon the settlor’s death is known as a testamentary trust, a trust under will or a pour over trust. There is also a trust that cannot be terminated once it is created, which is called an irrevocable trust. A trust that can be terminated once it is created is called a revocable trust. A living or inter vivos trust is usually a revocable trust until such time as the settlor dies, at which point the trust becomes irrevocable.
Each estate plan is different, as the individual’s needs are all different. As a result, each estate plan must be tailored to suit that individual’s particular needs. Since your needs change over time, taking the time to review your will and other estate planning documents with a qualified estate planning attorney on a regular basis will help you to ensure that your estate plan will continue to match up with your current needs and goals. To meet with an estate planning attorney who can work with you to draft a will and create a trust as may be appropriate for your particular circumstances, contact our firm to schedule a consultation.