Friday, February 2, 2018

Do You Have a Will?

Our family recently suffered the loss of one of its younger members. She had been a single mother until her recent marriage into our family. She leaves a young child.

Unfortunately, she did not leave a will or a trust. However, she had surgery about a year ago and completed a directive for the hospital. Included were a couple of critical pieces of information the family has agreed to abide by, although they aren’t binding.

Most people—especially younger ones—don’t like to think about what will happen when they die. They assume they will have a long time to take care of it.

I found out quite young that this is not always the case. My father died when I was seven, leaving my young mother with two children to raise alone. I knew how quickly life can turn upside down.

Who Doesn’t Need a Will or Trust?
Unmarried people with no assets can put off planning, at least for a while. Everyone else needs to plan.

What Happens if You Die Without One?
Your assets will be frozen, and your estate will be locked up in probate. The state will decide who will get your assets and dictate who will raise your children. Your heirs may also have to pay various fees and taxes.

Writing a Will
You can hire an attorney to do this for you, but there are also several good products on the market you can use to “fill-in-the-blanks.” These work well if you have a simple estate. However, if you have children you may want to consider a trust.

You can also create a “holographic will.” Different states have different requirements, but generally, this is a will written in your own handwriting (not typed). Most states require up to three witnesses, not named in the will, to observe and certify your signature and testify as to your mental soundness. These still require probate, and some states do not recognize them at all.

What is a Living Trust?
It is a legal document created during your lifetime to spell out your desires in regard to your assets and dependents in the event of your death. A trust bypasses the long and costly process of probate, so your wishes can be implemented quickly. Your trust should also contain durable powers of attorney for health and finances, which allow someone you designate to make decisions for you in the event you become incapacitated.

There are two types: revocable and irrevocable. With the first, you transfer your assets into the trust, but you retain control of them during your lifetime. With the second, you also transfer ownership to the trust, but you no longer have control of them. However, because of this, they are also not subject to estate and other taxes.

Who Needs a Living Trust?
People who have complex or substantial financial assets, special family circumstances (such as blended families), people who own a business, people who wish to bequeath their assets to someone other than a relative, and folks with estranged family relationships.

How Can I Get One?
For simple estates, software exists to create your own. However, this option should be used only for the simplest of estates.

For most people, it is worth the expense (between $1000 and $3000 or more per person, depending on the size and complexity of the estate) to hire an attorney who is a specialist in these kinds of trusts to draw it up. They are current on all the applicable laws and know how to word the necessary documents. Most will update you trust as your circumstances change over the years.

Hopefully, you want your wishes carried out in the manner you choose. Not putting these in writing leaves your survivors with a guessing game.

Our recent experience has brought home once again the necessity to make plans long before they are needed.

Do you have a will or trust? If not, why not?

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