Last Will and Testament
A Will, also known as a Last Will and Testament, is a legally prepared and binding document that states your intentions for the distribution of your assets and wealth after your death. A Will only has control over your probate assets and has no control over jointly held assets or assets with a beneficiary designation. For example, a bank account with a designed beneficiary will not pass through the Will. The reason for this is that the bank has a contract obligation to transfer the funds to the beneficiary you listed under the account. If you die without a Will, then your estate is considered “Intestate.” Being Intestate means that the State, not you, decides how to distribute your property.
At least one executor (or personal representative) must be appointed in your Will. The executor is responsible for managing your estate to its conclusion via a process called Probate. Although having a Will is better than not having one in the first place, if your goal is to avoid probate court, and it should, then you will need a non “Will based” estate plan.
Creating an effective estate plan used to mean drafting a Will. However, modern estate plan options can help to transfer property more easily. With a Trust, you can transfer property at death, ensure the transfers are done privately and without the need of court involvement. In addition, a Trust can add an increased level of asset protection for you and your loved ones.
A Trust has all the functions of a Will, plus additional benefits. A Trust acts like a Will, in that, it states your intentions for the distribution of your assets and wealth. However, unlike a Will, a Trust is designed to “hold” your assets in life and subsequently distribute your assets, according to the terms of the Trust, after your death. The transfer of Trust assets is performed via a private function called Trust Administration.
Differences between a Will and a Trust
Some differences between a Will and a Trust include:
- Wills require court involvement via a process called Probate in order to transfer items to beneficiaries. A Trust, if properly structured, avoids the need for Probate entirely. As such, beneficiaries gain access to assets more quickly than they might to assets that are transferred using a Will.
- Wills are public record which anyone can access while Trusts remain private.
- Wills do not provide any asset protection while Trusts provide certain levels of asset protection. By creating a Trust, you can protect your spouse and children from creditors.
- Wills can not plan for special need children or blended families. With a Trust you can properly provide for a child with special needs or other circumstances that may require lifelong care and/or make decisions in advance in the case of a blended family or a complicated family structure.
Incapacity Plan Documents
No estate plan is complete without Incapacity Plan Documents. In the event that you become unable to make decisions for yourself due to an accident or health complications, an incapacity plan lets you appoint a capable adult to make medical and/or financial decisions on your behalf. While you hope that you or your loved ones will never have to experience this, it could happen to anyone at any time.
Having an incapacity plan in place can save you and your family money, time, and needless anguish during a difficult time. Here is what you need to know about planning for your potential physical or mental incapacity in the future. An incapacity plan covers three aspects of your life: financial, personal, and health. With these arrangements pre-made, it allows your family, doctors, and legal team to carry on smoothly and protect you. An incapacity plan is not a singular document; rather it’s a series of advance directives to be followed if you are physically and/or mentally incapacitated.