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It's Easy!
Legal Onion asks you simple questions while guiding you with contextual help to ensure you understand the documents you are creating.
What is it?
A Will is a document containing your instructions and wishes as to how your property and assets (estate) are to be managed and distributed after your death. A Will is a written statement signed in compliance with the various formalities covered by legislation. A Will contains the names of the people you want to benefit.
Difficulty
Low, because you only need to sign in front of witnesses.
The Procedure
Answer the Legal Onion questionnaire, and we will review your answers and complete your document.
You must sign your Will in front of witnesses who do not have a financial interest in your estate and can attest to your competency. | | Peel Back the Onion
A Will determines how and to whom your property is distributed. You should have a Will because it is an effective way to control what happens when you pass away.
Without one, you are said to have died "intestate", and your property passes pursuant to intestate succession, which is a statutorily prescribed method of distributing your belongings.
In other words, the state will decide who receives your property, without any regard as to what you would have preferred. Your house may fall in the hands of a relative you have never met, when you would have given it to your unmarried partner. Perhaps you would have given your property to a good friend or a charity, without a will it would go to your family.
Maybe you don't want your children to share your estate equally, as they would if you die without a will. To avoid these types of situations, it would be to your benefit to create a will to guarantee that your property passes to the people that you select in the manner that you desire. | More information on Living Wills >
More information on Last Will and Testaments >
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It's Easy!
Legal Onion asks you simple questions while guiding you with contextual help to ensure you understand the documents you are creating.
What is it?
A Living Trust is a special entity that is legally capable of owning your property. You can be the person in charge of the Trust, that is a "Trustee" of your own Living Trust, keeping full management and control over all property transferred by you to the Trust.
If you don't take the appropriate steps now to avoid probate proceedings, then after your death, your property will likely pass through a lengthy and costly probate proceeding before "the leftovers" reach the people you want to inherit it from you. Probate is the court-supervised process of paying your debts, paying attorney's and executor's fees, and then distributing your remaining property to the rightful heirs and/or beneficiaries of your estate. A Living Trust avoids probate.
Difficulty
Moderate, because you need to transfer assets to the trust and sign in front of witness and notary. | | Peel Back the Onion
The A/B Trust
An A/B Trust is generally used to shelter more assets from estate taxes. Upon the death of the first settlor to die, an A/B Trust divides into Trust A and Trust B.
"Trust A" or the "Survivor's Trust" remains revocable and contains the survivor's property interests, and the surviving settlor has total control. If the survivor is the deceased settlor's spouse, this trust usually receives all assets that exceed the applicable exclusion, and this qualifies for the marital deduction, thus deferring any estate tax until the surviving settlor's death. If the survivor and the deceased settlor are not married, the deceased settlor's assets are usually not added to the survivor's trust since there is no way the transfer can qualify for the marital deduction.
Trust B or the "Credit-Shelter Trust" is irrevocable. It is designed as a bypass trust. For a married couple, the Credit-Shelter Trust contains the deceased settlor's assets that can pass tax free, equal to the unused applicable exclusion. For a married couple, this trust contains the deceased settlor's assets, and the estate tax is imposed on the trust to the extent it exceeds the applicable exclusion. This trust is designed as a bypass trust so that it can pass to the next generation of beneficiaries without triggering a transfer tax.
The average probate case takes over a year to complete. By that time, there is significantly less property remaining for your heirs since a whopping 3% to 8% of the property will have been diverted by lawyers, accountants, appraisers, court costs and other fees. The exact amount depends on state law and the fees charged by lawyers and others hired by the executor to administrate and probate your estate.
Who controls my property in the Trust?
While acting as Trustee of your own Revocable Living Trust, you will continue to exercise full management and control of your property, maintaining the ability to receive all income, withdraw principal, buy and sell assets, make gifts, etc. The only readily apparent change is your new title: "Trustee."
Why do I still need a Will if I use a Living Trust?
You need a so-called "Pour-Over Will" as a transfer device for property that you fail to transfer to your Living Trust during your lifetime. For example, if you acquire certain property shortly before you die, you may not have transferred ownership of it to your Trust. Consequently, the property may not pass under the terms of the trust document. Your "Pour-Over Will" includes language that directs your Executor to transfer or "pour-over" into the Trust any property that is not held in your Trust at the time of your death.
If you don't have a Will, any property that is not transferred by your Living Trust or other probate avoidance device (such as joint tenancy) will go to your closest relatives, i.e. "heirs," in the order determined by state law. Invariably, this may not distribute the property in the way you would have preferred.
How does a Living Trust avoid Probate?
All property that you transfer into your Living Trust during your lifetime will not be required to go through probate. Your Successor Trustee, the person you name to handle the trust after your death, will be directed to transfer the property to the "beneficiaries" you named in the Trust. Usually the whole process takes only a few weeks, and there need not be any legal or court fees to pay. When your property has all been transferred to your beneficiaries, the Living Trust simply terminates.
Is it difficult to transfer property into your Living Trust?
Not at all, and nothing really changes except the formal name on the title. For example, if you want to leave your home to loved ones through the Trust, you simply record a Quitclaim Deed (included in our forms package) to transfer ownership of the house from you as an individual to you as Trustee of your Living Trust. With regard to bank accounts, a new signature card must be signed by you as Trustee. Most bank officers are quite familiar with this simple procedure. Trust Funding Instructions are included in the package to assist you, and we are always available to help by email or phone.
Is a Living Trust normally made a public record,
like a Will?
No. A Will, unlike a Trust, becomes a matter of public record when it is filed, as required, with the probate court. All of the other documents associated with probate actions also become a public record, e.g. inventories of the deceased's assets, lists of creditors, heirs, etc. The terms of a Living Trust are rarely made public.
Who should use a Revocable Living Trust?
Anyone who wishes to avoid time-consuming and expensive legal proceedings over their estate when they either die or become incapacitated should use a Living Trust. This is especially true for those who want their surviving family members to receive all of their property without contests, disputes, high legal fees and other expenses.
Does a Revocable Living Trust protect
property from creditors?
Unfortunately, holding assets in a Revocable Living Trust does not shelter your assets from your creditors during your lifetime. A creditor who obtains a judgment against you can collect from the Trust property just as if you still owned it in your name, individually. However, after your death, property in a Living Trust is quickly and quietly distributed to your beneficiaries (unlike property that must go through public Probate proceedings). This expedited process can be quite problematic for creditors. Usually by the time creditors (who are unknown to the beneficiaries) learn about your death, your property may have already been dispersed, and the creditors have great difficulty determining exactly what you owned and where it went. Often, it may not be worth the creditor's time and expense to try to track down the property and attempt to collect from the new owners (your beneficiaries). |
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