Life is unpredictable. You never really know which moment might be your last. As you come to terms with your mortality, thinking of all the processes can be overwhelming. For example, you might worry about loved ones who will be unable to take care of themselves when you’re no longer around. Or you might worry that your intended asset distribution might never happen. All of this can be settled with a strong will and trust, and this article will help guide you through the legal process of setting up both.
Difference Between Will And Trust
A will (also called a testament) is a legal document that sets an order for distributing an individual’s estate after death. A trust is another type of arrangement entered into by an individual during their lifetime that anticipates the need for some financial management at death. Therefore, a will is an arrangement that sets up the distribution of assets after death, while a trust anticipates the need to make financial decisions during one’s lifetime. A will may have any number of clauses that outline the distribution of assets and instructions for disbursements at death, but it does not preserve a person’s estate after death. If a person wants to preserve the estate, they must create a trust. What makes a will invalid is its lack of clause regarding the preservation of one’s estate after death.
A will or trust allows an individual to put their wishes into writing in advance because it allows that individual or their family members to enjoy their assets and/or be protected from loss. It also ensures that there are no legal issues in the future if an individual dies without giving proper instructions.
How To Set Up A Will
The first thing that you need to do is make a list of all your assets. This list should include cash and property. Also, you need to list anything you wish to gift to others or any other instructions on how your assets are to be distributed. This list must be as thorough as possible because it will determine the type of legal action that will have to take place in case something happens to you.
To start your will, get a blank form from an attorney or download one online and start filling it out. There are different kinds of wills depending on where you live. If you are unsure, the best thing to do is contact an attorney. Once you fill out your will, have it witnessed and notarized. This makes the will legal in most states. The same goes for personal injury attorneys. However, some states provide protections for personal injury settlement money against creditors.
But that’s just the major process. For the will itself, there are a few things that need to be done.
1. Validating Statement
This is a sort of preface to the will, and it’s simply a statement in which you say who is authorized to make decisions on your behalf. Sometimes this can be as simple as who your executor should be. Other times, it might be a more complicated decision irrevocable trust amendment.
2. Executor
This person will take care of all the distribution of assets after you die, and they are usually appointed by the people who appointed them. Some states allow only one executor, while other states allow two people. For instance, if two children want part of the estate but want different things, they will each have an executor selected so their interests can be protected.
3. Naming The Beneficiaries
This is a list of people that you want to get paid off from the estate. Sometimes this list can include pets, family members, or even friends of the deceased.
4. Distribution Of Assets
The distribution of assets is everything that is given to beneficiaries, and it’s usually done by dividing the money up into categories. Most people have a checking account and an IRA (a retirement account). The IRA usually goes to children and other relatives, while the checking account goes to other family members or friends who don’t have much money.
5. Witnesses
This is a list of people that must witness the will for it to be valid. A notary public is mentioned in most states but is not required. You may also choose to have witnesses present during the reading of the will, which makes it legal and certified.
6. Ending Statement
This is when you review all the names and ensure that everyone has been paid off with their share of the estate. This gives a sense of closure for some people, but it’s more of a formalization for others.
How To Set Up A Trust
There are many types of trusts that you can establish, and you should choose one depending on what will best benefit your estate. There are revocable trusts, Inter Vivos trusts, and irrevocable trusts. The difference between these three types is that you can change a revocable trust after being set up, whereas the other two cannot be changed. The most popular type of trust is an inter vivos trust because it’s frequently used by people who want to avoid probate (the distribution of assets from a deceased person).
As for how to set up the trust, you’ll need a solicitor or attorney to sign the trust document. You can then start setting up how the beneficiaries will be paid and what assets you want to keep for yourself. The main difference between revocable and irrevocable trusts is that with an irrevocable trust, the creator is responsible for any tax issues that come up. However, if you are using a revocable trust, it’s assigned by law to be managed by a trustee who then manages everything according to the wishes of the creator. The trustee will also receive a fee for managing your trust, but this is usually worth it if the creator doesn’t have time to do things manually.
Conclusion
The will and trust processes are not as daunting as they seem, but you need to get in touch with an attorney if you want legal assistance. These processes can also be complicated depending on your scale of distribution, so don’t try to do them yourself (unless you’re very well-versed in drafting legal documents).
