Wills, Trusts, & Estate Planning
A “living trust” is often used as a substitute for a will as the primary estate-planning document. A living trust is also a revocable trust, meaning that the individual can change any or all terms of the trust or completely revoke or terminate the trust at any time through his or her life, provided that they have not lost legal capacity. While a will has effect only after an individual dies, a living trust has legal effect at the moment it is created. If assets are properly transferred into the trust, a living trust can prevent the need for a guardianship of the estate if an individual becomes incapacitated later in life.
Additionally, after the time of death, the living trust becomes a substitute for a will as the trust document has dispositive provisions, as does a will, as to who receives what assets and under what conditions after the grantor (the person creating the trust) dies.
Generally speaking, the advantages of a living trust over a will are:
- It can avoid a guardianship of the estate if an individual later becomes incapacitated, assuming all assets have been transferred to the trust; and
- To the extent that all assets have been transferred into the trust and there are no probate assets, there would not be a necessity for a probate proceeding after the individual’s death.
The primary disadvantage is that the preparation of the living trust and the funding of the living trust cost significantly more than does the creation of a basic will. Adding the cost of a probate to the cost of a will could, generally speaking, approximate the cost of preparing a living trust and having it properly funded. The difference in the living trust approach is that the transfer of the assets is done during one’s life and it is not the responsibility of the person left in charge after the person dies. Additionally, the older an individual is when he or she creates a living trust, the greater the likelihood of a possible incapacity which, to the extent assets have been properly transferred to the trust, can be avoided by a living trust.
Dealing with the loss of a loved one is emotional and difficult. The process of grieving alone can be trying and draining. Resolving and settling the decedent’s financial affairs makes it no easier, but the two are often inseparable. Heirs and creditors alike have something at stake, and clients so frequently find themselves facing a process that they never asked for, but one they must endure nonetheless.
Probate, or estate administration, is the broad term we apply to a variety of procedures used to gather a decedent’s assets, pay their debts and transfer property to their beneficiaries or heirs. What it entails, how long it takes and how much it costs is almost entirely dependent on facts and circumstances unique to each case. The following discussion highlights some of the different requirements that a client may encounter in these types of cases.
Power of Attorney
A power of attorney lets you appoint someone you trust to handle important financial and legal matters on your behalf either immediately or only if you are unable to make decisions for yourself.