Most of us are familiar with the slang term “Trustafarian” and how it is associated with a person living off unlimited buckets of inherited money but what we often, falsely, associate with trusts and estate planning is they are exclusive to the very wealthy. We incorrectly assume people with more moderate assets do not need an estate plan. This is simply not true. Estate planning, whether a will or trust, is critically important even for people who have very little. No matter your financial worth, if you do not specify your wishes, you may leave your family’s lawful inheritance in the hands of the court. Given the current conditions in our world today, for you and your loved one’s piece of mind, having an estate plan is vital.
Estate planning begins with a conversation about the nature and value of assets, general asset management needs and the dynamics of relevant family and friends. This conversation assists in determining if a will or a trust is the right vehicle for you. It is not as simple as one size fits all and if you own real property, a trust is likely a good option for you as opposed to a will.
A will is a legally binding set of instructions for the person who will receive your real and personal property in the event of your death, as well as who will oversee distributing this property. In addition, it clarifies your wishes for burial or cremation. A will, however, is subject to probate court, which can potentially tie up your assets in the court system well beyond your death.
A living revocable trust avoids probate and can be created even with moderate assets. You do not need to have enough assets to create future “Trustafarians” to set up a trust. You can place most of your property – accounts, cars, your house – into the trust. You will have full use of these assets as you normally would. Upon your death, this property automatically passes to those you have chosen. But remember, while you are living, you continue to have full use and control over your assets. Generally, the purpose of creating a living trust is to avoid “probate” and to create a smooth transition for transferring property after your death.
There are numerous other considerations which need to be discussed when creating a solid estate plan, including tax implications, power of attorney and advanced directives. Sound legal advice will help you with the process. Feel free to call us should you need assistance. Estate planning is vital in today’s world for protecting your loved ones, your property, and your own peace of mind.