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The topic for this week says it all. Is your estate in order? Now, you may be scratching your head asking yourself just what that really means. If so, you are not alone. When you ask yourself, “Is my estate in order?” you are really asking, “Will my spouse know what to do when I’m gone?” “Will my children know what to do when both me and my spouse are gone?” “Will my assets get tied up in probate?” “Will my assets be sure to go to the people who are supposed to inherit them?” Few of us want to spend time thinking about when we’re no longer here and able to spend time with our loved ones or share the things in life we love. But to ensure your family is taken care of you need a plan, you need to get your estate in order.
Most people have a will or a living trust, both of which determine how your assets will be distributed upon your passing. Wills are easy to create, but may cause problems down the road. A will must go through probate court before assets can be transferred and may be contested in the court, delaying the process. Moreover, a will may pass funds on to an heir who is incapacitated, or in the middle of a divorce, jeopardizing the end placement of the funds received. On the other hand, a living trust is more complex, but bypasses probate and guarantees your assets will be distributed exactly as you want. Living trusts are also non-contestable. That means that a child, for example, who is unhappy with the way you distributed your funds, cannot go to the courts and protest the distribution as the living trust bypasses the courts altogether.
Many people believe that once you set up a living trust that it cannot be changed. That is not the case. While you are alive, you are the trustee of the trust and can change anything in the trust. Once you pass however, the trust becomes an irrevocable trust and nothing can change. Now, when you set up your trust you will determine who will become the trustee (called successor trustee) when you pass. That person will have the powers you designate in the trust, for example, that person may have the power to manage your property, determine if a child is fit to receive funds and so on. When you set up your trust your attorney will review the many options you have with you.
How do you know if you need a will or a living trust? Everyone’s story marches to a different drum. So, if you have questions and are looking for some answers, give me a call and I can walk you through the steps to ensure that your estate is in order.