Although estate planning isn't as fun as checking out various restaurant reviews or booking a trip, it is vital. Without estate planning, you cannot choose who gets the assets you worked hard to accumulate. Without an estate plan in place, you could have a costly and long-lasting impact on your family or loved ones.

Will

A will is a legal document that sets out your last wishes for your property and asset distribution. It acts on property not transferred to the trust. It allows collection of assets, payments of the probate expenses, and transfer of anything left to the trust. In a pour-over will, anything left when a person dies is transferred to and administered per the terms of that trust.

Trust

The other method of estate planning is trust. It is a fiduciary arrangement where you delegate authority to a third party (trustee) to hold and manage your assets. The trustee ensures that your assets are handled the way you've outlined. There are several types of trusts, and you should assess your goals and needs before deciding which one you'll create.

Revocable Living Trusts

This is a trust created and can be revoked or altered when you are alive. It is single probate avoiding trust but not the best option for asset protection while you are alive because any assets within are available to your creditors. A quitclaim is included in revocable trusts to retake control of the assets back to yourself.

Testamentary Trust/Trust Under Will/ Will Trust

This type of trust is included within the will and comes into effect at the time of your passing, and outlines the conditions for establishing the actual trust. Unfortunately, the will trust goes through the probate process, diminishing the privacy protections offered by some trusts.

Living Trust

You create a revocable living trust when alive. It designates a third party to manage the assets for your beneficiaries after your death. Revocable living trusts are further divided into revocable living trust ABC and revocable living trust AB.

Irrevocable Trust

In this trust, you cannot alter anything therein once it's established. You've legally removed any ownership rights on anything that the trust contains. An irrevocable trust is used to bypass tax estates or protect your assets from creditors. If you work in a profession vulnerable to lawsuits, an irrevocable trust can be beneficial. The grant deeds are signed and transferred to the trust, and real property like title deeds are deposited.

A good example is an irrevocable living trust. It cannot be rescinded, modified, or amended after creation. In case of the grantor's death, the trust continues collecting the benefits and distributing them to the trust beneficiaries as per the grantor's instructions during its creation.

Asset Protection Trust

This type of trust is designed to protect your assets from future creditor claims. They are structured to be irrevocable for a fixed term of years, with you not among the beneficiaries. Upon the termination of the period, the undistributed assets are returned to you, giving you complete control.

Charitable Trust

If you feel Philanthropic wants to avoid or lower the gift and estate tax imposition, you could establish a charitable trust. Charitable remainder trusts are funded in the lifetime of the guarantor. Besides financial benefits, charities can also reward your altruism.

QTIP Trust

A QTIP trust is used in estate planning and is helpful if the beneficiary comes from a previous marriage but the grantor dies before the future spouse does. The estate tax is determined after this trust's second spouse's death.

Although a will is part of an estate plan, they are different. An estate plan is a broader action plan for your assets and may apply both when alive or upon your death. On the other hand, a will dictates how your assets will be transferred upon your death, who will be your children's guardian and more.

This document allows a person to plan for healthcare decisions that might be made on your behalf in the future. This can be done in two ways; a living will or an advanced healthcare directive by durable healthcare power. It can cover your wishes for organ and tissue donation, comfort care, DNR and DNI orders, and artificial hydration and nutrition. That way, you avoid having these decisions made on your behalf.

You can set up a special needs trust for when your healthcare deteriorates by planning.

While estate planners can help you plan your assets for when you depart, they cannot do it alone. You need financial advisors to help you evaluate the financial risks involved in various estate planning methods and choose the right action based on your monetary objectives. They can also ensure that your assets are counted based on their realistic values considering aspects like penalties, appreciation, depreciation, and inflation.

Despite what most people think, trust is beneficial for any estate size, not the large ones only. The benefits include:

• Privacy
• Eliminated or reduced gift and estate taxes
• Asset Protection
• Avoid probate court, ensuring the beneficiaries receive the assets sooner.
• You can control your future wealth better by establishing asset distribution conditions.

Estate planning is vital at ensuring your loved ones enjoy your hard-earned wealth in the event of your death. Without it, they'd have to wait for the lengthy probate procedure that is also expensive. Tools like wills and trusts help you establish trust funds and qualified domestic trusts to ensure your beneficiaries do not struggle after you pass. Others like advanced health directives help you avoid Conservatorship in deteriorating health. Finally, manage your personal affairs and control your wealth distribution when alive by enlisting the help of will and trust advisors. Estate planning is a progressive and challenging process. Instead, work with a professional who can review what options you have. Contact us for estate planning today.