FAQ

While a Will and a Living Trust are created as part of a typical estate plan and they work together to ensure the estate plan is complete, there are differences between them.

One main difference is that Wills are effective only upon death, whereas Living Trusts are effective upon creation. As such, it is more difficult to contest a Living Trust.

A Will is a document that appoints a legal representative to distribute assets and carry out your wishes at death. A Will passes through probate which means the court oversees the administration of the Will and ensures the property is properly distributed. A Living Trust, on the other hand, is a document containing a set of instructions to someone you appoint in the Trust, called a trustee. The Trust passes outside probate which can save time and money.

Another difference is that a Will controls property that is titled in only your name when you die. It does not control property held in joint ownership or in a trust. By comparison, a Trust controls property that has been transferred to it.

An estate plan is one of the best gifts you can give to yourself, your family and loved ones. Whether it’s designating guardians for your children or someone to act for you in the event of your incapacity, avoiding probate, preserving your estate for heirs, reducing or potentially eliminating taxes, or charitable planning, almost everyone could benefit from an estate plan.

Yes, you can be the sole Trustee of your Living Trust, or you can appoint someone to act with you. If you become disabled or you pass away, the person you appoint as a successor trustee in your Trust will step into your shoes and serve as your Trustee.

You will be asked to complete a Personal Information Booklet, providing information about you, your spouse, and your children and grandchildren. Following the initial meeting you will be asked to provide information about your assets. That information is essential as it helps the estate planning attorney with the overall design, tax planning, and with transferring assets into the Trust.

In my office, creation of an estate plan is a 3-step process. The first step is to meet to get to know you and discuss your goals and objectives. You will be asked to bring a completed Personal Information Booklet with you to the first meeting. The initial meeting can range from 1.5 to 2.0 hours or more depending on the number of questions.

The end goal of the first meeting is to develop an estate plan design for you.

The second step is the drafting of your estate plan documents, which can take 4 to 6 weeks, but may be completed sooner if there is a pressing need (e.g. upcoming travel plans).

The third and final step is to schedule a meeting to review and sign your documents. The review document meeting typically takes 1.5 to 2 hours.

There are many things to consider when creating a living trust, including trustee selection, beneficiaries, creditor protection, tax planning, beneficiary designations, and the myriad of state and federal laws that relate to trusts, taxes, and property rights. Engaging an experienced estate planning attorney is very important to help navigate through the various issues and to design a plan that meets your goals.

If you become mentally incapacitated and you do not have an estate plan, a guardian and/or conservator will need to be appointed for you by the probate court. The better method is to create a general durable power of attorney which is a written authorization that allows someone else to make financial and legal decisions for you. You should also have a health care power of attorney which will allow someone to make medical decisions for you if you are unable to make those decisions yourself. Powers of attorney should only be given to trusted individuals. The person you name in your general durable power of attorney can be different than the person you appoint to make health care decisions.

Under current law, the amount of assets you can pass after your death without incurring estate tax varies depending upon the year of your death. In 2017, the exclusion amount is $5,490,000. In 2016, the exclusion amount was $5,450,000.

Estate plans are living, breathing documents that should not be put in a drawer and forgotten. An estate plan should be updated when there is a change in circumstance such as the birth or adoption of a child, a marriage or divorce, a change in assets, or a desire to update beneficiaries on IRAs, 401(k)s, life insurance or other assets. Changes in state and federal law could also trigger a need to revise an estate plan. Unless there is a more pressing need, estate plans should be reviewed and updated every 1 to 2 years.

A revocable living trust does not provide creditor protection while the trustmaker is living. However, depending on how the trust is drafted, a trust beneficiary may benefit from creditor protection. Asset protection should be part of the dialogue when creating an estate plan, as quite often individuals have concerns about protecting assets in the event of a beneficiary’s divorce, bankruptcy, or an individual’s poor spending habits.