Setting the record straight:  Myths of the Living Trust

Setting the record straight: Myths of the Living Trust

If you’re reading this, chances are you have already thought about setting up a living trust.

First, let’s define the benefits of a living trust.

A living trust allows you to retain control over the trust property until death. Then, the trust is turned over to the successor trustee, chosen by you, to distribute the trust property according to your wishes. This helps to avoid probate, resulting in a faster and easier distribution to your beneficiaries without the additional costs that are often associated with probate. It also maintains your privacy since its provisions stay confidential, compared to a last will and testament, which becomes a matter of public record.

You can update a revocable trust at any time during your lifetime. Revocable living trusts are used to protect your property until your beneficiary is mature enough to make wise decisions about their inheritance.

Next, let’s delve into some common myths about a living trust.

Myth #1: Living trusts are only for the wealthy.
While it is true that many wealthy people set up trusts, it doesn’t mean that this option is only for the rich. In fact, many people with average incomes find living trusts to be extremely beneficial; especially those with children or dependents.

Myth #2: Living trusts only benefit beneficiaries, not the people making the trusts and not you, the grantor.
In fact, a trust allows for easier handling of your affairs if you become incapacitated, and makes things much less stressful for your loved ones that are left to care for your affairs when you’re unable to do so.

Myth #3: You can’t access funds once they’re in a living trust.
This ignores the “living” part of the living trust. All funds and assets can be made as accessible as you wish, to you or to whomever you choose. You can structure the trust so that everything is accessible to you and you alone until your death.

Myth #4: Creating a living trust is expensive and complicated.
Setting up a trust may cost a bit more up front than a last will and testament, but the cost savings later can make up for these expenses in the long run.

Myth #5: A will can do the same things a trust can do.
A living trust adds flexibility. For one, it allows you to give your hard-earned money and property to those you care about while still protecting it for them. For example, if you have beneficiaries who you feel are not able to handle large sums of money on their own yet. Maybe your potential beneficiary is struggling with debt or an unstable marriage; a living trust may be the perfect instrument for you.

Have a discussion with estate planning attorney Chuck Bendig. Call 614.878.7777

This video contains my Last Will and Testament

This video contains my Last Will and Testament

Have you ever thought, ‘When I die, I’ll leave a video for my loved ones’? More and more people are preparing a video in which they read their will and explain why they’ve left certain belongings to some and not others. The recording can show the execution of the will and can be compelling proof that you were mentally competent, but is it a good idea?

Let’s explore some of the pros and cons of a video will.

Pros:

A video will can head off claims that you weren’t of sound mind or were being unduly influenced in some way when you signed your will. A video will help in the event that someone is disappointed and decides to hire a lawyer to contest your will. The video can also show you and your witnesses signing your will. In which case, clearly demonstrates that you were rational, knew the contents of your will and were expressing your own wishes.

A video will can supplement your formal estate plan: For example, if you want one child to serve as executor, a video will is your chance to say so. Your other children or family won’t be left to wonder about your actions. If you want to get into detail, a video will can also express how you’d like your family to divvy up items of sentimental value.

Cons:

(This is a big one.) Although you may use your video will to convey how your family should distribute sentimental items, you need to know that your wishes are not legally enforceable. Meaning your video won’t be accepted by a probate court, a bank or any other institution that controls assets in your name. Only a formal paper will is legally enforceable.

Videos don’t last forever and therefore, are subject to damage.

If you opt for a video will, consider it as an add-on to a formal, legal, paper will, filed by an estate planning attorney, and remember these tips:

  • Use a quality camera that clearly identifies your face.
  • Speak clearly without distortion and eliminate as much background noise as possible.
  • Keep the video-captured area at medium close-up.
  • The video cannot be edited and must be submitted with any kind of technical data necessary to play it back.
  • Some states want you to be sworn in by a person authorized by law to take oaths.
  • Prior to administering the oath, any officers of the court have to identify themselves on camera.
  • Mention the date, time and place of the recording prior to recounting your last wishes and the recorded names of your beneficiaries, as well as the names and addresses of the will’s witnesses if they’re not present at the taping.
  • The video Will should run without interruption.

Remember, it’s still the law that to be valid, a Last Will and Testament must be on paper and signed. If you have nothing but a recording of the deceased person’s last wishes, you’re unlikely to have a Will that will hold up in court.

Finally, keep in mind that a will, in either written or video form, is not the only estate planning tool you have. Various trusts can also help make sure your estate is left according to your wishes.

Who Should Be Your Inheritors?

Who Should Be Your Inheritors?

If you’ve thought about estate planning and have contemplated when and how to distribute your assets to your heirs, read on. You probably imagine that this process will entail a series of trade-offs to prevent emotion-laden family problems. However, when you focus on numbers, you’re dealing with objective and straightforward facts.

But, you are in murkier waters when considering who should inherit your wealth, and you understand that emotions will most likely factor into those decisions. The truth is, there is no correct answer to how to distribute your estate. But here are some questions that will help frame your thinking:

  • How much would you like to leave to charity and how much to your family?
  • Will you divide your assets equally among your heirs, or on some other basis, like need or good behavior?
  • What form does your estate take? Is it cash, securities or some other assets? Do you want to give these outright or leave them in a trust?
  • Can the heirs you chose to handle the responsibility of managing their own finances, or will they need help?
  • If you use a trust, will there be provisions, what will they be and whom will you designate as the trustee?

Maybe we should take a step back and clarify what exactly an heir is. An heir is a relation who potentially is entitled to money or property after you die, such as a spouse or child. Laws in each state outline the exact order in which heirs inherit property, but the list stops at a certain point. Not every heir automatically inherits.

The term “heir” is often used when someone dies without a will. When that happens, the estate administrator tries to find who rightfully inherits the property.

A “beneficiary” is a person or an organization who receives money or property by being specifically named in your will or trust. Beneficiaries can include charities, descendants or close friends, even places of worship.

If you leave a will, beneficiaries often have more rights to whatever assets remain after probate. If you don’t leave a will, the assets go to the first heir in line, and the process continues until a living blood relative is found. Keep in mind that rules may vary depending on the jurisdiction.

Trusts can help ensure the people you want to get your assets, in the form you want. Ensuring the transfer of your hard-earned assets to your heirs is a crucial part of a well-thought-out estate plan. Although it may be uncomfortable to have a conversation like this with your spouse, your children, and other possible heirs, it will enable them to ask questions and to clarify what your exact wishes are. While the estate planning talk deals with sensitive issues, it will mean a smoother transition for your heirs after your death.

Get started with your estate plan.