The topic of estate planning and creating a Will can sometimes be a difficult subject to bring up, but it’s a very important topic to discuss with your loved ones, and with an experienced estate planning attorney. Estate planning, when done properly, can ensure that your affairs are handled properly after you pass on, that your family is taken care of, and the inheritance and property is shielded from unnecessary taxes and fines.
What is a Will?
A Will is a document designed to instruct your heirs how to divide and dispose of your tangible personal property and other assets when you pass away. A Will also designates guardians for minors. Television series often portray having a Will as the most important document to govern the administration of your estate when you pass away. This is mostly true—but if you own real estate, your Will has to go through probate. But again, guardians are elected in your Will and it is a necessary document.
What is a Trust?
A Trust is one of the most common estate planning techniques available. While there are many different variations of Trusts, they all share the same basic structure. The creator of the Trust is called the grantor who signs an agreement with a trustee who agrees to hold assets in Trust for the grantor’s chosen beneficiaries. Sometimes the grantor and the trustee are actually the same person.
Think of the Trust like a bucket. The grantor creates a bucket and puts assets into it, such as bank accounts and a home. The trustee’s job is to hold the bucket handle and the assets “in trust” for the beneficiaries named by the grantor. The trustee administers the trust according to the rules laid out by the grantor including how and when to take assets out of the bucket and give them to the beneficiaries.
The benefits of Trusts can include:
- Probate avoidance;
- Cost savings;
- Tax planning;
- Privacy; and
- Peace of mind.
Do I Need a Will or a Trust?
Both Wills and Trusts can be commonly used estate planning tools, and you may want to have both depending on your situation. The main differences that you will find between the two are that Wills are only effective after your death, whereas Trusts can become effective immediately (or at a specified time in the future); Wills are directives used to distribute property or appoint a legal representative after your death, whereas Trusts can distribute property at any time prior to or after your death; Wills cover all of your assets, whereas Trusts only cover items that are specifically placed in the Trust; and finally, Wills are public documents while Trusts can remain private if you choose. An experienced estate planning attorney can help you decide which is right for you.
How Important is Power of Attorney or Health Care Directive?
Granting someone “power of attorney” (POA) is a very important step in estate planning because it designates someone who can make legal decisions for you in the event you are unable to make them on your own. These can include financial decisions as well as medical or legal ones, so the person you appoint to this duty should be someone you trust and someone who knows what you would want. Without POA, these decisions could be left up to a judge in the courts, who is likely a stranger and will have no idea what you would have wanted.
A Health Care Directive (HCD) is designed to instruct medical caregivers and doctors how you want to be cared for in the event of incapacitation. Incapacity most commonly includes a coma or dementia. This document covers your Living Will wishes, which are your wishes if you are in a state of unawareness with little or no hope of recovery. You choose your own healthcare agents and tell through this document your wishes. You can revoke this document at any time while you’re competent to make decisions for yourself.
How Often Should I Update an Estate Plan?
The best answer to this question is: as often as you need to. While there is no set time frame for updating your documents, you should make sure to revisit them any time you have a significant life event take place. This might include things like:
- Marriage or divorce
- Additional children, whether by birth, adoption, or marriage
- Death of a spouse
- Significant changes to your assets
- Changes to tax laws, or the status of guardians, trustees, or executors
Since you may not know when the tax laws change, in the absence of any of the other events, it’s a good idea to visit with an estate planning attorney in Utah about once every five years to be sure yours is up to date.
What Happens if My Family Contests My Will?
The death of a family member can be a very difficult time, and sometimes other issues within the family spillover when settling an estate plan. Fortunately there are things you can do to protect the directives spelled out in your Will, even in the face of a legal challenge after your death. Having a plan that is created and properly executed by an estate planning attorney is the best way to protect against this. It’s also helpful to discuss your wishes and plans with family members while you are alive to avoid surprises.
Estate planning can be complicated, so to answer all your questions and get started on your estate plan, call an experienced attorney today.