Estate planning can seem a little overwhelming to someone who is new to the concept. Knowing that the components that make up your estate plan will likely represent the most important set of legal documents you execute over the course of your life can be intimidating. Along with the need to make potentially life-altering decisions, you will also need to work with estate planning tools and strategies that are unfamiliar to you. Among the most basic of those tools is a Last Will and Testament and a trust. To help familiarize you with those tools, a Los Angeles wills and trusts attorney at Collins Law Firm explains five things you need to know about wills and trusts.
- What is a Will? A Last Will and Testament is a legal document that communicates your final wishes pertaining to possessions and dependents. Your Will allows you to make both specific and general gifts. Your Will is also where you will appoint someone to be the Executor of your estate. Your Executor plays a vital role in the probate of your estate after your death. Finally, a Will provides you with the only official opportunity you will have to nominate a Guardian for your minor children in the event one is ever needed after you are gone. One of the most important benefits to executing a Will is that is ensures your estate will not be administered using the state’s intestate succession laws which distribute a decedent’s estate to legal heirs according to priority.
- What is a trust? A trust agreement creates a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor (also referred to as a Maker or Grantor), who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. All trusts are first divided into one of two categories – testamentary or inter vivos – the latter of which is more commonly referred to as a living trust. A testamentary trust is a trust that arises upon the death of the Settlor and which is typically activated by a provision in the Settlor’s Will. A living trust is a trust that takes effect as soon as all the legalities of creation are in place. Living trusts can be further divided into revocable or irrevocable living trusts.
- Can I use forms I found on the internet? Although it is understandable that you might see an opportunity to save time and money by using one of these forms, the reality is that you are more likely to cost your loved ones a considerable amount of unnecessary time and money when it comes time to probate your estate. DIY Will forms are notorious for having mistakes, errors, and omissions that lead to protracted litigation during the probate of an estate. Your Last Will and Testament is something you want done right – the first time. To make sure that is the case, work with an experienced estate planning attorney during the creation and execution of your Will.
- How is a trust administered? The Trustee is responsible for administering a trust. The duties and responsibilities of a Trustee can be wide ranging and will differ from one trust to another; however, there are some common duties and responsibilities most Trustees have, including:
- Following all trust terms unless they are illegal or unconscionable.
- Communicating with beneficiaries.
- Investing trust assets using the “prudent investor” standard.
- Managing trust assets.
- Distributing trust assets.
- Keeping trust records.
- Preparing and filing trust taxes.
- Defending the trust against legal challenges.
- Should I use a Will or a trust to distribute my estate assets? This is something that can truly only be decided after consulting with an experienced estate planning attorney; however, there are some common considerations when deciding whether a Will or a trust should be used. If your estate is small enough to qualify for small estate administration, and you do not have minor children (nor plan to have any in the near future), a Will should suffice. If, however, your estate is large enough that probate avoidance is a consideration and/or you do have minor children who will inherit from your estate, a trust is often the better choice to distribute your estate.
Contact Los Angeles Wills and Trusts Attorneys
For more information, please join us for an upcoming FREE webinar. If you have additional questions about wills and trusts, contact an experienced Los Angeles wills and trusts attorney. Contact the Collins Law Firm by calling (310) 677-9787 to register for one of our FREE estate planning workshops.