By: Conor McCarthy, Conor@LedgerSquareLaw.com
Whether you’re just starting to think about estate planning, or you need to make modifications or learn more about a family member’s estate plan, the estate planning attorney’s at Ledger Square Law, P.S. are here to help. During the estate planning process (read more here), we execute documents that outline the administration or distribution of your estate upon your death. Most estate plans fall into the following two categories: a Last Will and Testament or Living Trust.
Last Will and Testament
Your Last Will and Testament (“Will”) directs the disposition of your assets upon your death. In your Will, you may make specific bequests of certain property you would like to give to specific people. In addition, for personal property, your Will also incorporates a separate list that you can create and modify at any time (on your own), in order to direct belongings to loved ones. In addition to your specific bequests, your Will also makes provisions for your ‘residuary’ estate, that is the remainder of your estate.
Will everything be given to your children equally?
Do you want to make any charitable gifts?
Your Will answers these questions as you deem fit. Your Will also identifies the Personal Representative of your estate, as well as your immediate family members, and whether or not any provision is made for your family. For married couples, a Community Property Agreement is typically drafted contemporaneously with the Will. A Community Property Agreement allows for the disposition of the decedent’s interest in the community estate to his or her surviving spouse by operation of law, and without the need for probate.
Many Wills often include trusts called testamentary trusts. A testamentary trust will typically be included within your Will for the benefit of a spouse, minor children, pets, and/or utilized as a tool to address or mitigate future estate tax burdens. A testamentary trust is funded at the time of your death with the assets that are directed to that trust as set forth in your Will.
For example, you may have a Will that establishes that your entire residual estate (after making any specific bequests) will go into a trust for your minor children, to be utilized for their benefit in accordance with the instructions you put into the trust, until the final distribution thereof.
In addition, while your Will does not generally address the disposition of non-probate assets, such as your investments, life insurance, and retirement accounts, we’ll review these accounts with you and make sure you have the appropriate transfer on death beneficiary designations in place as part of your retirement plans.
The basic Will estate plan for a married couple will include the following documents: a Last Will and Testament (one Will for each spouse), a Community Property Agreement, a General Durable Power of Attorney, a Health Care Power of Attorney, and a Health Care Directive (optional).
A Living Trust: During your Lifetime
A Living Trust accomplishes the same objectives of the typical Will, but in a completely different way. With a Living Trust, all of your assets are immediately put into trust, and you continue to manage all of your assets as the creator (or settlor) of the trust, despite transferring all of your property into the trust. During your lifetime, you can modify and/or revoke the trust in your discretion (hence, making the trust ‘revocable’).
A Living Trust: At the Time of your Death
At the time of your death, the trust then becomes irrevocable and cannot typically be modified. Subsequently, the individual you have identified as the successor trustee in your Living Trust becomes essentially the executor of the trust, and then distributes the assets of the estate directly to the beneficiaries you have identified therein. Living Trusts are typically favored by individuals who desire to avoid the probate process involved with administering a Will.
A Living Trust: Making Estate Administration Efficient
Living Trusts generally increase the chances that your estate plan will remain private, and sometimes allow for a more stream-lined transfer of assets upon death. Though Living Trusts are prepared to avoid the necessity of a Will, a Pour – Over Will is typically created (along with the Living Trust) to ensure that any of the decedent’s assets that have not been properly transferred to the Trust, end up being directed to the Living Trust upon the decedent’s death. Though often characterized as a tool to increase the efficiency of estate administration, the Living Trust requires more front-end administration in order to make sure that all of your property is properly held by the trust. Moreover, Living Trusts (like all trusts) are subject to laws governing administration (which come along with their own sets of rules and requirements).
(Note: Even where there is no probate, a Will has to be filed with the Court).
The basic Living Trust estate plan for a married couple will include the following documents: a Living Trust (jointly for both spouses), a Pour – Over Will(s) for each spouse, a General Durable Power of Attorney, a Health Care Power of Attorney, and a Health Care Directive (optional).
During our initial consult, our estate planning attorneys will help you determine whether you need a Last Will and Testament or a Living Trust. Whichever document best suits your needs for how to handle your estate after you pass, the attorneys at Ledger Square Law, P.S. are here to help you.
Written by Conor McCarthy at Ledger Square Law, P.S.. Conor McCarthy is an experienced Real Estate and Estate Planning attorney who has spent nearly 15 years helping his clients navigate and resolve complex transactions and disputes. Click here to learn more about Conor’s specialized estate planning services.