Everyone wants to protect their families, even after they pass from this world. That’s the purpose of estate plans. But how do you know whether all of the elements of a good plan are in place?
Have you decided that it's time to consider estate planning and contemplate when and how to distribute your assets to your heirs? Realistically, you imagine that this process will entail a series of trade-offs to prevent emotion-laden family problems.
In theory, parents can get as specific as they want, deciding which children and grandchildren should get the fancy lamp from the living room or the painting of the ship in the dining room. But unless they're items of great intrinsic value, that usually isn't done, and even if an estate is left equally to all the grown children, fights can break out over who gets what. There have even been situations where the first child on the scene cleans out the family house, leading to hard feelings and even lawsuits.
You don't necessarily create a trust and just forget about it. You may revise a revocable trust whenever your circumstances change. Perhaps you want to add a beneficiary. A trust can be revoked or amended at any time as long as you, its creator, are mentally competent. Having an updated trust will reduce the chances that your property will pass through probate.
How do you ensure that both your new spouse and your children from your first marriage receive an inheritance if you die before your newly married spouse does? Who gets the house — your new spouse or your children? How will your new spouse get by financially if you choose to provide an immediate inheritance for your children?
Trusts can be used as an asset protection tool and to help your beneficiaries avoid the cost and expense of probate. Trusts transfer legal ownership of assets to a trustee. The property is deeded in the name of the trust and the trustee is tasked with administering it as the grantor specifies. There may be more strings attached to an asset in a trust than if it were simply left to someone in a will.
If you find yourself on life support, who will make decisions for you? Unfortunately, it's been estimated that fewer than one in three Americans have what's called a living will or advance health care directive.
You may be thinking of creating a trust to help manage your assets — or maybe you don't even know how a trust could help. Here is a basic overview of trusts:
You may have heard of a living trust that's created while you are still alive. It can be set up as a revocable trust, permitting you to change the terms of the trust or to dissolve it entirely should circumstances change.
What happens after your death? A last will and testament comes in handy to document the name of the person (executor) who carries out your wishes after you die. If you don't own a lot of property, a simple will is likely all you'll need.
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