A will is the legal document that allows you to distribute your property to those you choose. A will allows you to designate beneficiaries to receive specific items from your estate, and other beneficiaries to receive everything else. For example, if you want your house, your car, or your antique thimble collection to go to a certain person or organization, you designate that person or organization as the beneficiary.
Who is going to make sure that your antique thimble collection goes to the proper person? The executor of your will. The executor is the person you designate to carry out your wishes.
A will also gives parents of minor children the chance to nominate a guardian. The court makes the final decision when appointing a guardian for your children after your death, but the court will usually accept your nomination. A guardian’s legal responsibility is to provide for your child’s physical welfare.
A will comes into play only after you die, but a living trust can actually start benefiting you while you are still alive. A living trust is a trust established during your lifetime. It can be revocable or irrevocable. If the trust is revocable, it allows for you to make changes. There are several ways to avoid probate. Those ways are known as probate avoidance techniques. A living trust is a probate avoidance technique. Other ways of avoiding probate is to create beneficiary accounts or payable on death accounts, or to have property titled in Joint Tenancy. If you decide to create a trust, you will transfer those assets named in the trust to the trust by assigning all your interest in that asset to the trust. For example, your home or any other real property named in or subject to the trust will be conveyed to the trust. Those assets not conveyed or assigned to the trust, or those assets that have not been handled with some other probate avoidance technique, can be transferred into the trust at the time of death through the use of a simple Pour-over Will. You should always make a Pour-over Will at the time that you establish your trust.
A living trust will be used as the mechanism to manage your property before an after your death, as well as to provide how those assets, and the income earned by the trust, are distributed after your death. If you should become incapacitated or disabled, the trust is in place to manage your financial affairs, usually by a successor trustee, if you were serving as a trustee. A living trust is not subject to probate, and therefore, all provisions of the trust will remain private.
Joint living trusts are also possible. They simply combine the assets of a husband and wife into a single trust, governed by a single trust document. However, if estate tax minimization is possible, the joint living trust must be very careful drafted with the help of an attorney in order to achieve desired goals.