Everyone Needs an Estate Plan – Do You Have a Will and Living Trust?
When people hear the words “estate planning”, they often think it only applies to the rich and famous or those who have the potential of a taxable estate. This is a common misconception.
Everyone, regardless of their net worth, needs to prepare some basic estate planning documents. Basic estate planning documents not only direct how your assets will be distributed upon your death but can also carry out your final medical wishes. Most importantly, these basic estate planning tools can help protect your loved ones during a difficult time. Here are the two tools you should have:
- Will – This is a legal document that lays out the distribution of your personal property after you die. You choose the person, your personal representative, who will oversee your estate as it goes through probate. A will not only protects your physical assets but also any children you have as a will allows you to appoint a legal guardian, rather than letting the court make this decision. A will must be drafted by a lawyer who can ensure that your will meets your home states legal requirements.
- Living Trust – This is a legal entity where you are able to transfer title of your property during your lifetime. The first major benefit is you maintain control over all of the assets transferred to the living trust during your life. You also choose who the trustee of your living trust will be when you die. The trustee ensures, after your death, your assets are distributed to the named beneficiaries. The second major benefit of a living trust is that this trust avoids probate, which can be costly and time consuming.
A living trust does not eliminate the need for a will but your lawyer can draft both of these documents for you and make any amendments. Amendments to these documents allow you to make changes to these documents as your family may grow or change after the initial creation. In the next two entries in this series, we’ll take a look at the medical and beneficiary components of estate planning.