Wills and Trusts Lawyer
A will is a document that determines to whom and how the takings of an estate are to be distributed to the beneficiaries. After the death of the estate owner, the will drafted by your attorney under your supervision is then probated in surrogate courts. In cases, where there are questions as to the validity or authenticity of the will, I help you with the Will Contest Estate Litigation.
In a nutshell, then a person passes with a will, they are known as a testator. Then the will is swiftly probated in surrogate courts and the proceeds of the estate are distributed to the beneficiaries accordingly.
Now a trust, being a legal agreement, determines that there is one person – or an institution – called a ‘trustee’ who has legal holder-ship for another who is called a ‘beneficiary’. One main difference between a will and a trust is that a will goes into effect only after you die, while a trust takes effect as soon as you create it. A will is a document that directs who will receive your property at your death and it appoints a legal representative to carry out your wishes. By contrast, a trust can be used to begin distributing property before death, at death or afterwards. A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to property for another person, called a “beneficiary.” A trust usually has two types of beneficiaries — one set that receives income from the trust during their lives and another set that receives whatever is left over after the first set of beneficiaries dies.
Everyone has heard the terms “will” and “trust,” but not everyone knows the differences between the two. Both wills and trusts are important estate planning instruments that serve varying purposes, and combination of both can work together to create a complete estate plan.
One main difference between a will and a trust is that a will goes into effect only after person dies, while a trust takes effect as soon as it is created. A will is a document that names beneficiaries after the death of the distributor. Will also appoints a legal representative to carry out decedent’s wishes. By contrast, a trust can be used to begin distributing property before death and other contingency situations. A trust is a legal arrangement through which “trustee,” holds legal title to property for another person, called a “beneficiary.” A trust usually has two types of beneficiaries — one set that receives income from the trust during their lives and another set that receives whatever is left over after the first set of beneficiaries dies.
A will covers any property that is in the name of decedent at the time of the death. It does not include property held in joint tenancy or in a trust. A trust, on the other hand, covers any property that has been transferred to the trust through trust instrument. Thus, in order for property to be included in a trust, it must be put in the name of the trust.
Another difference between a will and a trust is that a will passes through probate procedures. That means a court manages the administration of the will and makes sure the will is valid and the property gets distributed the way the deceased wanted. A trust passes outside of probate, so a court does not need to oversee the process, which can save time and money. Unlike a will, which becomes part of the public record, a trust can remain private.
Wills and trusts each have their advantages and disadvantages. For example, a will allows you to name a guardian for children and to specify funeral arrangements, while a trust does not. On the other hand, a trust can be used to plan for disability or to provide savings on taxes.
Completing your Will
Begin by inserting your name, county, and state at the beginning of the will. Then go through each of the following clauses in order. Include the marital status that applies to you. If you are separated but have not yet received a divorce decree from the court, you are still legally married. If you are using the Will for Adult with Children, list your children’s names and dates of birth. Include children born to you or whom you have legally adopted. It’s important to name all children, no matter how old they are and whether or not you intend to leave them property in the will. Children aren’t generally entitled to inherit anything from their parents, but if it appears that a child was accidently overlooked, that child might be able to make a claim against your estate.
Specific Gifts. If you want to list specific items of property you’re leaving through your will, you’ll use this section. When you list items, describe them so that your executor—and anyone else—will know exactly what you meant. There is no need to use formal legal descriptions unless they are really necessary to identify the property. Here are some examples of good property descriptions:
- “my house at 435 7th Avenue, New York, New York”
- “all household furnishings and possessions in my house at
435 7th Avenue, New York, New York” and
- “$10,000 from my savings account, No. 44444, at First
National Bank, Chicago, Illinois.”
In this clause, you should also name alternate beneficiaries. These are the people or organizations that will inherit if your first choice as beneficiary does not survive you. When you name beneficiaries, use their actual names. Don’t leave property to a group such as “my nieces and nephews”; it can cause unnecessary confusion (or conflict) if it isn’t exactly clear who is included in a group. If you do not want to leave specific gifts, then delete this clause and renumber the subsequent clauses. If you make no specific gifts, everything will go to the person or persons you name to inherit your residuary estate.
Residuary Estate. The rest of your property—everything you don’t leave as a specific gift—is called your residuary estate or residue. Here, you state what you want to happen to that property. For example, if you’ve made a few small specific gifts and want everything else to go to your spouse, put your spouse’s name here. You can also name an alternate residuary beneficiary who will receive your residuary estate if your first choice does not survive you.
Beneficiary Provisions. You don’t have to add anything to this clause. It just spells out some basic rules about how the will works. First, it states that a beneficiary must live at least 45 days after your death in order to inherit property. This is to avoid a situation in which a beneficiary who dies at almost the same time as you do inherits your property which then goes to his or her heirs or beneficiaries instead of the alternate beneficiary you chose. This clause also states that shared gifts (left to two or more beneficiaries together) are shared equally unless you specify otherwise. Finally, it states that when you leave property, any encumbrances on it—for example, a mortgage—pass with the property. In other words, the beneficiary gets the debt as well as the property.
Executor. You must name someone to be in charge of winding up your affairs after your death. This person is called your executor (or “personal representative” in some states). The executor must shepherd your property through probate—the court process of distributing the property of a deceased person—if it’s necessary, and must see that your property is distributed according to the wishes expressed in your will. Many people name their spouse or a grown child as executor. The executor usually doesn’t need special financial or legal expertise. The important thing is that the person you choose is completely trustworthy and will deal fairly with other beneficiaries. You can also name an alternate executor who will serve if your first choice cannot.
Personal Guardian. If you are using the Will for Adult with Children but you don’t have any minor children (under 18), delete this clause and renumber the subsequent clauses. If you do have young children, put down the name of the person you want to raise them if for some reason you and the other parent cannot. Also enter the name of an alternate, in case your first choice isn’t available. In the unlikely event that a child legal guardian is needed, a judge will review your choice. If no one objects, the person you choose will be appointed as guardian. If there is family conflict over who should serve, the judge will hold a hearing and decide what’s in the best interests of the children.
Property Guardian. If you are using the Will for Adult with Children but you don’t have any minor children (under 18), delete this clause and renumber the subsequent clauses. If you do have young children, name someone to handle any money (or property) your children might inherit while they’re still minors.
Minors can own property, but if the amount is significant and an adult must manage it for them, that’s the role of the property guardian. If your child ever needs a property guardian, the court will appoint the person you name here. The guardianship would end when the child turns 18. Choose someone who is totally honest and competent at managing money. You can also name an alternate property guardian who will serve if your first choice cannot.
Gifts Under the Uniform Transfers to Minors Act. If you are using the Will for Adult with Children, but your children are not minors or young adults, then delete this clause and renumber the subsequent clauses. If any of your children are minors or young adults, you can, in every state except North Carolina and Vermont, name a “custodian” who will manage any property the child inherits through this will until the child turns the age set by state law, 21 in most states, up to 25 in a few. Courts do not supervise custodians, whose duties are set out in the law called the Uniform Transfers to Minors Act. The property guardian you named above would manage any property not covered by the will until the child turns 18. You can name a different custodian for each child, if you wish. Just fill in a separate clause for each child. You can also name an alternate custodian who will serve if your first choice cannot.
Your will does not need to be notarized, but your signature on your will must be witnessed. When you are ready to sign it, gather together two adults who aren’t beneficiaries of your will. Your witnesses do not need to read your will. You simply state, “This is my will.” Then you sign and date your will while the witnesses watch. Finally, each witness signs while the other witnesses watch. Be sure to store your will in a safe place, where your executor can find it easily when the time comes.
The Concept of a Trust
A trust is an intangible legal entity (“legal fiction” might be a more accurate term). Beyond a few pieces of paper, you can’t see a trust, or touch it, but it does exist. The first step in creating a working trust is to prepare and sign a document called a “Declaration of Trust.” Once you create and sign the Declaration of Trust, the trust exists. There must, however, be a flesh-and blood person actually in charge of this property; that person is called the “trustee.” With traditional trusts, the trustee manages the property on behalf of someone else, called the “beneficiary.” However, with a living trust, until you die, you are the trustee of the trust you create and also, in effect, the beneficiary. Only after your death do the trust beneficiaries you’ve named in the Declaration of Trust have any rights to your trust property.
How a Living Trust Works
The key to establishing a living trust to avoid probate is that the grantor—remember, that’s you, the person who sets up the trust—isn’t locked into anything. You can revise, amend, or revoke the trust for any (or no) reason, any time before your death, as long as you’re legally competent. And because you appoint yourself as the initial trustee, you can control and use the property as you see fit while you live. And now for the legal magic of the living trust device. Although a living trust is only a legal fiction during your life, it assumes a very real presence for a brief period after your death. When you die, the living trust can no longer be revoked or altered. It is then irrevocable.
With a trust for a single person, after you die, the person you named in your trust document to be successor trustee takes over. That person is in charge of transferring the trust property to the family, friends, or charities you named as your trust beneficiaries. With a trust for a couple, the surviving spouse or partner manages the trust. A successor trustee takes over after both spouses or partners die.
There is no court or governmental supervision to ensure that your successor trustee complies with the terms of your living trust. That means that a vital element of an effective living trust is naming someone you fully trust as your successor trustee. If there is no person you trust sufficiently to name as successor trustee, a living trust probably isn’t for you. You could name a bank, a trust company, or another financial institution as successor trustee, but doing so has serious drawbacks. After the trust grantor dies, some paperwork is necessary to transfer the trust property to the beneficiaries, such as preparing new ownership documents. But because no probate is necessary for property that was transferred to the living trust, the whole thing can usually be handled within a few weeks. The successor trustee may need to hire an attorney to prepare some of the required documents.
No court proceedings are required to terminate the trust. After the job of getting the property to the beneficiaries is accomplished, the trust just evaporates, by its own terms. In some cases, a living trust can continue some time after the trust maker dies—for example, a “child’s trust.” The trust forms in this book allow you to create a child’s trust if you wish, to leave trust property to one or more minors or young adult beneficiaries. These trusts are managed by your successor trustee and can last until the young beneficiary reaches the age you specified in your Declaration of Trust. Then the beneficiary receives the trust property, and the trust ends.
Other Advantages of a Living Trust
As you know, the main reason for setting up a revocable living trust is to save your family time andmoney by avoiding probate. But there are also other advantages. Here is a brief rundown of the other major benefits of a living trust.
Out-of-State Real Estate Doesn’t Have to Be Probated in That State
The only thing worse than regular probate is outofstate probate. Usually, an estate is probated in the probate court of the county where the decedent was living before he or she died. But if the decedent owned real estate in more than one state, it’s usually necessary to have a whole separate probate proceeding in each one. That means the surviving relatives must find and hire a lawyer in each state, and pay for multiple probate proceedings. With a living trust, out-of-state property can normally be transferred to the beneficiaries without probate in that state.
You Can Avoid the Need for a Conservatorship
A living trust can be useful if the person who created it (the grantor) becomes incapable, because of physical or mental illness, of taking care of his or her financial affairs. The person named in the living trust document to take over as trustee at the grantor’s death (the successor trustee) can also take over management of the trust if the grantor becomes incapacitated. When a couple sets up a trust, if one person becomes incapacitated, the other takes sole responsibility. If both members of the couple are incapacitated, their successor trustee takes over. The person who takes over has authority to manage all property in the trust, and to use it for the benefit of the grantor or grantors.