Wills and Trusts
The foundation of your estate plan is your will because it designates how and to whom your property will be distributed after death. If you don’t have a will, you could be giving up your right to distribute your property as you wish.
Wills are not only for wealthy people. Wills are the primary documents for transferring wealth upon death. If you die without one, state law controls the disposition of your property. In addition, without a will, settling your estates could be troublesome and costly for your beneficiaries. Three major provisions that should be included in a will are:
- Guardian for your children.
A will should name a guardian for minor children in the event that both you and your spouse die. Make certain that the person you elect is willing to accept the responsibility. - Creating Trusts.
All a will can do is direct the disposition of your estate. To accomplish longer term goals, such as funding a child’s education or providing for an elderly parent, you may need to include instructions for the creation of trusts at your death. - Naming an Executor.
Your executor is your personal representative after your death. He or she has several major responsibilities, including: administering the estate and distributing assets to beneficiaries; making certain tax decisions; paying debts/expenses of your estate; ensuring all life insurance and retirement plan benefits are received; and filing necessary tax returns and paying the appropriate federal and state taxes.
Assets owned jointly or that have beneficiary designations, such as life insurance, annuities, or retirement accounts, are not controlled by your will. However, their values are part of your taxable estate.
While do-it-yourself and Internet wills are popular these days, you should keep in mind that estate, probate, and tax laws are complicated. A few misplaced or omitted words in your will can make a will null and void. You should consult with your attorney when designing your will.
We are not not a legal or tax advisor.Revising Your Will
Periodically reviewing your will is a good idea. It may need revising if :
- You move to a different state
- Your financial resources increase or decrease
- You add another dependent
- You change your life insurance
- Your heirs change marital status, have children or die
- Your guardianship plans change
- You acquire property in another state
- You inherit or purchase property
- Your property increases substantially in value
- There is a change in tax laws
To change your will you must execute a new one or amend an existing one. Don’t try to change your will by crossing out something. Changes made in this manner may be meaningless, and may even void the entire will. See your lawyer to make any changes.
Trusts
Trusts are legal arrangements in which you, the grantor, place assets in trust for the benefit of others, the beneficiaries. Trusts are invaluable estate planning tools that can be either set up under the provisions of your will or established during your lifetime. Some of the most frequently used types of trusts are:
- Revocable Living Trusts
- Unified Credit or Bypass Trust
- Charitable Remainder Trust
- Irrevocable Life Insurance Trust
« Life Event: Having a Child | Home | Cheap California Life Insurance »
Comments are closed.