Wills and Trusts

Wills
A will directs how you want your financial affairs to be handled when you die and names a guardian for minor children where appropriate. It does not take effect until death. It can be changed at any time before you die or become incapacitated. In a will, you appoint an executor to manage your estate and distribute your property to the proper persons. The will itself can provide for one or more trusts to be established upon death, in which case, the will also appoints one or more trustees to carry out the terms of the trusts created in the will. Even if you have a living trust, you need a will as part of your estate planning.

If you have no will and you die owning assets of a certain type or amount, the court will appoint an administrator for your estate who may or may not be the one you intended to manage your affairs. Under certain circumstances, one of your creditors could be appointed. Furthermore, if you do not have a will or if you do not give your executor power in the will, for example, to manage your investments, run your business, buy and sell stock, or sell real estate, the executor or administrator of your estate must petition the court for permission to deal with your property. This can be time-consuming and expensive.

Rules vary enormously from state to state regarding the formalities that must be observed in order to make a valid will. These formalities include the number of witnesses required and whether a handwritten will is valid if it is a “fill-in-the blank” will and not wholly in the writing of the maker of the will.

Trying to do your own will is fraught with danger. It is important not only to have a will, but to have a will that is prepared by an experienced estate planning attorney.

Trusts
Trusts can be used in the estate planning process for many purposes. Types of trusts include testamentary trusts (those trusts created by a will and not existing until the will is probated), revocable living trusts (sometimes referred to as family trusts), irrevocable trusts, special needs trusts for disabled individuals (which may or may not be created by a will), and asset protection trusts. Unless the “watchful eye” of the court and Commissioner of Accounts is required over the actions of the person they have chosen to carry out the terms of the trust (the “trustee”), most people today prefer to create non-testamentary trusts, which do not require court and Commissioner of Accounts supervision, for probate avoidance and flexibility and economy in operating the trust.

Wills and trusts can be used in the estate planning process in order to transfer property to beneficiaries. Although trust transfers can occur before death, trusts, like wills, are most often used to transfer property to beneficiaries upon death.