Living Trusts – Revocable Trusts – Irrevocable Trusts – Testamentary Trusts – Inter-Vivos Trusts – Generation-Skipping Trusts… and the list goes on. Too much information can keep your head spinning, so let’s start here: A revocable living trust is most commonly used in an estate plan and is a powerful estate planning tool that enables individuals and families to manage their assets and plan for their futures. It allows the grantor, or creator of the trust, to transfer assets into the trust while they are alive and maintain control over those assets. With the revocable living trust, the grantor may designate beneficiaries who will receive income or principal from the trust’s assets during and/or upon the death of the grantor.
There are three important roles involved in a revocable trust.
- The grantor (or settlor) is the creator of the trust, generally you.
- The beneficiaries benefit from the trust by receiving income or principal according to the wishes and instructions of the grantor. Beneficiaries are often you and/or family members.
- A trustee is a person or entity who manages the trust assets; this can be you, a family member, or a corporate trustee.
Since a revocable living trust is revocable—meaning it can be changed at any time during the grantor’s lifetime as long as the grantor still has capacity to do so—it gives individuals flexibility in managing their financial affairs both during their lifetime and after death. Should circumstances change, the grantor can easily change his or her beneficiary designations without having to go through probate court proceedings. Additionally, because these trusts can be used to transfer wealth across generations without going through the probate process, they provide financial security for families while avoiding those costly legal fees of probate.
Wills
Usually includes guardianship.
Last Will and Testament – Pour-Over Will – Testamentary Trust Will – Simple Will – Deathbed Will – Holographic Will – Living Will… and so on. What is the difference and why are there so many?
A will is essentially a written document that outlines how you want your estate and any assets to be divided up when you die. It will also name the Executor, the person who will be responsible for carrying out your final wishes. This document will serve as the blueprint for distributing your net worth, such as assets and debts, in accordance with your wishes after you have passed away, as well as naming a guardian for minor children. A will must be signed by the testator (the person making the will) in the presence of two witnesses.
A Pour-Over Will is a special type of Last Will and Testament that works together with a living trust. This document transfers—or pours—any missed property into your living trust when you pass away. Basically, having this type of will helps you cover all your bases and prevents any applicable property from being left out of your living trust.
Having a will and testament is important not only for you, but for your loved ones as well. Without these documents in place, it will be much more difficult to ensure that your final wishes are honored, and your estate is divided according to the way you want it. It will also help prevent any disputes among family members or other people who may be entitled to some of your assets.
Durable Power of Attorney
Should a person become ill or incapacitated and can no longer take care of their own finances, this document allows the appointed agent to manage all finances and assets.
Health Care Directives
The advance health care directive is probably one of the most important documents included in estate planning. This document outlines a person’s wishes for medical care, personal care, and living arrangements, just to name a few, in the event that they are unable to make decisions for themselves. It can include, but is not limited to, specific directives regarding treatments such as life-sustaining measures, end-of-life decisions, and organ donation. An advance health care directive will also include appointing an agent to make medical decisions on the person’s behalf should they become unable to do so. This document will remain in effect even if the person becomes incapacitated or is otherwise unable to communicate their wishes. So, make sure to create one if you want your wishes to be honored!
