Preparing for the distribution of your estate (assets you own at the time of your death) can be a very stressful experience. After all, with so many important decisions to make, no one wants to make the wrong one. One of the most common dilemmas is whether to have a will or a living trust—or both. Texas Legal Members are able to create and/or update their estate plans once a plan year. Knowing the fundamentals and basics of wills and living trusts will help you make the right decision.
First begin with understanding probate, as it plays a significant role in estate planning. Probate is the administrative and court process that takes place after you die. It includes proving the validity of a will (if there is one), identifying, inventorying, and appraising property, paying debts and taxes, and (finally), distributing whatever assets remain.
Because probate can drag on for months or even years, much of the wealth you’ve accumulated over your lifetime can be eroded. Wills and trusts have the power to reduce probate dramatically so that your heirs can efficiently inherit what you want them to receive.
A will is nothing more than a set of instructions that specifies who gets what of your assets. If you have property and loved ones, having a will is vital. If you die without one, state law takes over and makes distribution decisions on your behalf. In most cases everything goes to your spouse and/or children. If you have neither, your closest relatives will be the recipients, and if you have no relatives, your entire estate will be absorbed by the state. While the court may make the same decisions you would have, in many cases it does not.
One of the most compelling reasons to draw up a will is if you have children who depend on you for care. A will allows you to stipulate guardianship. Without one, the court will make this very personal choice for you.
Members of Texas Legal are encouraged to create a will and update it yearly. Every legal plan with Texas Legal pays for our member’s estate plans to be updated each plan year. Because this is such an essential document, you’ll want to be sure it’s done right.
A living trust is a bit more complicated in concept than a will, but in essence, it is a separate legal entity that holds title or ownership to your property and assets. While you are alive and acting as the trustee, you hold full control over all the property held in the trust.
The primary reason to create a living trust is to avoid probate. Property held in a trust won’t have to go through probate before your loved ones receive their inheritance. More, where wills are public, trusts are private, and usually harder to contest.
Living trusts by nature are often more involved than wills, so having a Texas Legal Attorney draw it up for you is the best option.
Not everyone needs a living trust though. Be sure to speak to an attorney before deciding if a living trust is right for you. Be aware that they are time-consuming to put together, and require considerable ongoing maintenance. Changes to a trust can take a long time, and moving certain assets such as real estate, savings, and brokerage accounts into the trust requires re-titling, which can be cumbersome.
A Will Plus a Trust
Wills and living trusts are not mutually exclusive estate planning devices. In fact, if you have a trust, you should probably have a will to make sure all of your assets will be distributed according to your wishes. Most trusts do not provide instructions for everything in your estate. A will acts as a backup for what is not included in the trust, as it would have a clause naming a person who you want to receive all leftover property. Without a will, anything you didn’t transfer into the trust will go through that long and expensive probate process. Once again, those assets will be distributed according to state law – and most likely not the way you would choose to have your property dispersed.
Learn more about estate planning, budgeting, and financial counseling with BALANCE. Your Texas Legal membership grants you free access to BALANCE and its services.
Get Help From Texas Legal
While estate planning certainly can be an anxiety-provoking process, knowing the fundamentals and basics of wills and living trusts should ease some discomfort. With Texas Legal, we are always on your side to help you plan for your future. Use our online Attorney Finder to locate a qualified attorney near you. If you need help with your membership, feel free to call us at (512) 327-1372 or email us at email@example.com.