Estate Planning
Estate planning is a process for preparing how your property will be managed and distributed if anything should happen to you. This page will discuss two of the most common tools used for the management and distribution of your assets: Wills and Revocable Living Trusts.
While the focus tends to be primarily on property asset management, other important considerations are who will be guardian of your children, or who may make healthcare decisions for you if you are unable. For more information regarding guardianship and healthcare proxy nominations, please visit Life Planning.
Wills
Wills are an essential part of any estate plan. A Will allows the creator (testator or testatrix) to distribute property among beneficiaries, name the person who will manage their estate, and name guardians for minor children. A Will does have some limitations, such as lack of privacy since it becomes part of the public record once probated, and a lack of creditor protection since property distributed by Will may only pass to beneficiaries once all claims against the estate are satisfied. Wills also have strict execution requirements that vary from state to state. While a Will may be an imperfect tool, it is still necessary and useful since authority under a power of attorney ends upon death, and some property may still pass through the Will even when the testator has another property management vehicle such as a Revocable Living Trust.
Revocable Living Trusts
The creation of a Revocable Living Trust is a popular choice for many clients, regardless of their level of wealth. During the lifetime of the grantor, the property placed in the Revocable Living Trust may be used, sold, or gifted away as freely as property still held in the grantor’s name. The difference is, upon the grantor’s death the trust becomes irrevocable, and the property placed in the trust would pass to the beneficiaries outside of the probate process. This would save time, and estate administration expenses.
Revocable Living Trusts are also private documents. They are an agreement between the grantor (the person creating the trust) and the trustee (the person who is holding title to the trust property for the benefit of someone). Unlike a Will, the trust does not become part of the public record and the dispositive provisions of the trust remain private.
Revocable Living Trusts are very flexible documents that can be custom tailored to nearly any family situation, such as second marriage protections, creditor protection for the beneficiaries, protection against wasteful misuse of property, and the preservation of property for successive generations.