Wills and Trusts

Wills
A will distributes the property you own at the time of your death.  It may be used to distribute tangible property, such as furniture, jewelry, or family heirlooms, as well as real property, such as your home.  These are known as probate assets.  In appropriate circumstances, a will can be used to distribute all of your probate assets.  However, it cannot be used to distribute non-probate assets, such as life insurance.

After your death, your will goes through the probate process.  The probate process is a public procedure that takes place in court.  The court determines whether the will presented to it is valid and whether it is your final decision regarding how you want your assets distributed on your death.  The court also confirms the person you appointed to administer your estate. This person is known as an executor or personal representative.

Trusts
There are many different types of trusts:  revocable trusts may be revoked or amended during the creator’s lifetime.  By contrast, irrevocable trusts are permanent and generally cannot be revoked or changed after they are executed.

As the creator of the trust, you determine what assets are put into trust, how those assets will be used, and other rules that will govern management and distribution of your assets.  It is common to direct that, during your lifetime, the trust be managed to benefit yourself or you and your spouse.

Trusts are highly customizable.  You and your attorney will work together to develop a trust agreement that sets forth the rules that will govern the trust and the trustee.  The trust agreement is similar to a contract and should be tailored to achieve your unique goals.

Trusts are a flexible tool and can be created to achieve many purposes.  For example, they may be designed to ensure financial resources are available to the person who created it if he or she becomes mentally or physically incapacitated, provide continued asset management and creditor protection for a spouse, children, grandchildren, or other loved ones.  A trust can also direct how your assets are divided and distributed after the trust creator’s death.  Additionally, some types of trusts may allow you to legally minimize that taxes that must be paid on your estate.

Many people believe trusts are only for the wealth.  This is not true.  People of modest means often use trusts to provide for adult children who are disabled or do not manage money well.  Additionally, trusts are a valuable tool for parents with young children because the trust can ensure assets are responsible managed until the children are old enough to make responsible financial decisions.

There are also many types of specialty trusts including:  special needs trusts, life insurance trusts, educational trusts, and qualified personal residence trusts.    In fact, a trust can be designed to accomplish almost any purpose.  Accordingly, trusts are an especially valuable estate planning tool and should be part of your discussion with your attorney as you evaluate your options.