Do you already have an up-to-date estate plan in place? If not, then you will need to create or update the proper documents to ensure that your assets will be divided as you intended after you pass away. Here are some common questions about wills and living trusts, as well as what can happen if you decide not to create an estate plan.
Will vs. Living Trust
It is important to know the difference between a will and a living trust.
What Is a Living Trust?
Having a living trust will let you move assets you own into a trust while you're still alive. Things like vehicles, property, stocks, bonds and jewelry can all be put into a living trust due to them being personal property. A living trust will list beneficiaries and how assets are distributed to them.
How is a Will Similar to a Living Trust?
You can modify wills and living trusts when you want to. You are able to remove or add assets over the years, and even modify the beneficiaries to determine who receives which items.
A living trust will require an assigned trustee, who will have similar responsibilities to the executor of a will. The trustee will distribute assets after your death, and can even manage the living trust if you end up incapacitated. For example, a living trust will give the trustee access to money to help pay your bills if you're unable to pay them yourself.
How is a Living Trust Better?
You will never see the differences between a will and a living trust, because most of them take place after your death. A will is filed with a probate court so the proper legal procedures can take place to finalize the will. A will could result in waiting a very long time for people to receive the assets they are assigned. A will eventually becomes a part of public records, allowing anybody to access the document to see what you left behind to beneficiaries. Trust offers far more privacy..
Living trusts allow asset distribution to happen immediately since there will not be a probate process. All asset distribution will remain private, and others will not be able to see what was in your estate when you passed.
The Consequences of No Estate Plan
Not having an estate plan in place is a serious problem. Yet 55% of adults in the U.S. do not having one in place. Know what can happen if you decide to not do anything regarding your estate.
Who Will Be in Charge of the Estate?
Every state has laws to determine when probate is necessary. Necessity is usually based on sizeon size of the Estate. Estates that require probate will have a court appointed administrator. The court starts by selecting a surviving spouse or adult children, and then moves on to other relatives.
Small estates that do not require probate have a very simple process to distribute assets, which is decided by a family member.
How Will Inheritance Be Determined?
Every state has its own succession laws. These laws ultimately determine who will receive your assets after you pass away. A surviving spouse and blood relatives generally havea rightful claim. Friends and partners that are not married will not be able to make a claim to any assets, and would depend on your family members to redistribute assets to them. If you do not have surviving blood relatives, your assets will go to the state.
Do All Assets Go Through Probate?
If you have any assets with predetermined beneficiaries, such as life insurance or jointly owned property, those assets will go to the appropriate people automatically.
Now that you understand more about estate planning, it is time to get one in place. Work with Clara Yang, Attorney at Law to help you get it done.