It’s never too early to create a will or set up a trust to protect your assets and your family.
No matter the number of assets or size of your estate holdings, wills and trusts will protect you and your loved ones throughout your life and after. If you’re on the fence about creating a will or a trust, ask yourself the following questions:
- What happens to my property after I die?
- Who gets my property?
- Who gets any money left over after funeral expenses?
- Do I have an appointed guardian for my minor children? Do I care who they are?
If you’re not sure of the answers to these questions, it’s time to start thinking about creating a will or a trust.
What Is A Will?
A will is a legal document instructing how you want your financial and material assets to be distributed after your death. To ensure that your wishes are executed properly, an executor is identified to follow the specific instructions within your will after your death. In addition to having an executor, you specify a legal guardian for any minor children and provide instructions on how and when they will receive their inheritances.
A will isn’t the end-all-be-all of distributing your assets, money, and property. It still needs to go through probate court. In probate, a judge reviews your will and determines if it’s legal and valid. Once it’s determined as valid, the executor has the legal right to administer your estate, such as resolving outstanding debts and distributing your assets to beneficiaries.
What Happens If I Don’t Have A Will?
If you don’t have a will, under Utah law the probate court will take over and settle your estate. Probate delays the amount of time needed to settle your estate, and the costs associated may be high. Without a will, litigation may be necessary to resolve disputes over the distribution of your assets. These disputes can create animosity between family members because they all have ideas about your intentions and how assets should be distributed.
When you die without a will (intestate), your assets are distributed to your next of kin. For example, if you’re unmarried but have a partner you’ve been with for a long time and they have a child from a previous marriage, your estate will pass to any living siblings and be split up into equal shares. This leaves nothing for your partner and child with no legal right to your assets. Having a will in place ensures that your partner and child inherit all or a portion of your estate.
What Is A Trust?
A trust is recommended for people with significant assets as the cost to create and administer it can cost upwards of $5,000. It is a legal entity created to protect the assets in your estate. A trust won’t cover things like appointing a guardian for minor children, but it will cover your estate’s finances and keep them private, avoiding probate court.
When you create a trust, the assets and property are no longer owned by you but by the trust. There are multiple types of trusts you can create, and your needs determine the type of trust you should create. There are two types of trusts that are the most common — revocable and irrevocable. Let’s take a look at both types and how they differ.
A revocable trust is created during your lifetime. It can be altered, changed, modified, or revoked. It is often called a living trust and allows you to transfer the title of a property to the trust, serve as the trustee, and you can remove property from the trust during your lifetime.
Revocable trusts help you avoid probate by transferring ownership of your assets to the trust during your lifetime. Because you no longer own the assets, the probate court doesn’t have to determine the trust’s validity as it does for a will. However, a revocable trust does not protect your assets, as they are still available to any creditors. It may be more difficult for creditors to access the assets because they have to petition the court to access the assets held in the trust.
An irrevocable trust cannot be altered, changed, modified, or revoked once it’s created. Once you transfer your assets to the trust, no one, including you, can take the property out. A revocable trust generally turns into an irrevocable trust upon your death.
The assets from an irrevocable trust are distributed as outlined in the trust’s corpus. A corpus is the sum of money or property set aside to produce income for a beneficiary. These assets are passed along to beneficiaries in tax-free distributions over a specified period.
No matter what type of trust you create, you still need a will. A trust never includes all of your assets, and for those left over, you’ll need a will to distribute them appropriately to your beneficiaries.
Do I Need A Lawyer?
While you could create a will and trust yourself, you’ll need to know how to form them independently. This gets complicated if you have a lot of assets and properties to protect and distribute. Therefore, it’s a good idea to hire an estate attorney experienced in creating wills and trusts. An attorney can walk you through creating the will or trust and advise on distribution methods and discuss any potential disagreements.
Find An Experienced Lawyer
ProvenLaw is a legal group providing trust, estate, tax planning and litigation, probate and trust administration, and business succession planning in Utah. We exceed client expectations by offering unmatched expertise, client service, and quality work. With more than 90 years of collective experience, ProvenLaw promises consistency, knowledge, clarity, constant communication, resolution, and peace to you.
Don’t hesitate to ask us a question. When it comes to estate planning, business, taxes, or litigation, there’s a lot to think about and consider. Contact us today, and we will help you answer the tough questions about estate planning.