Wills and Trusts are Estate Planning tools to help distribute your estate after you pass away.

A Will is a written document expressing your wishes and only becomes active after death. A trust, on the other hand, is active the day you create it.

What’s a Living Trust?

Like a Will, a Trust is used to transfer property after death to loved ones. It’s called a Living Trust because it is created and active while the Trustor (property owner) is still alive.

Almost anything of value can be placed in a trust. Think real estate, vehicles, accounts, fine art & jewelry, etc.

How Does a Living Trust Work?

Once established, the Trustor must transfer ownership of their assets and possessions into the trust. We call funding the trust, and I can’t explain how crucial this step is.

The Trust document will also name a Trustee. This might be a relative or a professional. Either way, their job is to oversee the instructions of the trust contract are carried out.

Trustors can add conditions like, a grandchild graduating college before receiving their inheritance.

How Is a Living Trust Different from a Will?

1. 1. Privacy: Wills become a public document as soon as you pass. On the other hand, only beneficiaries of a trust will know how the estate is distributed.
   2. Probate: Wills are subject to probate, whereas a Living Trust can help your heirs avoid this lengthy and costly process.
   3. Minors: Only a Will can appoint a guardian for your children.

Pros of a Living Trust:

1. 1. Save time and money in the probate process.
   2. Offers more protection if contested or challenged.
   3. Trusts are totally private, per the Trustor’s wishes.

Cons of a Living Trust:

1. 1. The data gathering and reviewing phase can take a lot of time.
   2. Retitle and re-deed process. The trust is no good if your assets and possessions are not titled to it.
   3. Attorney fees: most attorneys bill hourly and can add up quickly. (It’s still cheaper than probate)

Estate Planning can feel overwhelming. Just remember, you don’t have to figure this out alone.

Work with your team of trusted, fiduciary advisors to create the best plan for you and your family.

The post Let’s Talk Wills and Living Trusts: What’s the Deal? appeared first on AWM.

People often think that their last will and testament is the best way to manage and distribute their estate after death.

But is that enough to protect your heirs? Or, is it going to give them access to a large, unrestricted amount of cash?

One of my clients, that I worked with for many years, was so excited to share her life savings with her only child. Against my recommendation, she only wrote a will, leaving everything to her daughter in a large sum. Unfortunately, this heir spent all of her inheritance within just a few months.

In fact, 1 in 3 heirs will spend their inheritance within the first two years.

More often than not, they are not equipped to handle so much money suddenly and responsibly.

So, what’s my advice?

1. First, talk to your heirs about money. Share your intentions for the inheritance and make your wishes clear.
2. Secondly, set up a trust. This will preserve their inheritance, limit their spending, and will help in teaching your kids money management.
3. Lastly, seek professional help. Talk to an estate planning professional, who will educate you on various options to help your kids preserve their future.

Remember, you are investing in yourself and in your family. How awesome is it to leave an impactful inheritance?

With the right planning, you can set your loved ones up for success. If you have questions, schedule a quick call with me.

Let’s bless your children and leave an enduring legacy.

The post How to Protect Your Children from Financial Disaster appeared first on AWM.

Mistake 1: Your documents are arranged out-of-state

Your estate planning documents such as, a will, trust, power of attorney, advanced directive, etc., should all be drafted by an attorney, who is familiar with the state laws in which you currently live, or where you have real estate. This is very important. A great example is the validity of a will in various US states. California honors a handwritten and unwitnessed will while the state of Oregon does not. If a will is drafted in Oregon, it’s important for the witness to sign an Affidavit of Attesting Witness in case the estate is probated. California courts do not require this extra document. You should also be aware of your state’s Estate Transfer Tax; reducing your estate’s exposure to this sort of tax might be important for you to consider.

If your legal advisor is not familiar with the laws of the state you are drafting your estate documents in, serious problems could arise. Don’t leave a mess for your heirs and loved ones. Ask your attorney or even fiduciary financial advisor to help ensure your plans are in order and will be executed as you intend.

Mistake 2: You rely on old documents

Keeping your documents up to date is so important—especially as laws change. If your estate plan is not updated appropriately after big life changes, your family might deal with that burden.

For example, you may have originally set up your estate to avoid estate taxation under federal laws when the free pass was only up to $1,000,000. In that case, your documents might need an update according to recent tax laws. 

Other situations might include the people you originally included in legal documents. Maybe you designated your ex-son-in-law to execute your estate plan. Since that relationship faded, you should find someone else for this role. Other documents might appoint a close friend to serve as a legal guardian for your children, but as relationships change, you are no longer close to this friend. You should appoint a new guardian and document the changes in your estate plan. Sometimes hiring a third-party administrator for your trust is a good option.

Mistake 3: You don’t understand your estate plan

The estate planning process can feel overwhelming for many clients. Others see it as a laundry list of things to check off as quickly as possible. You don’t need to understand all the legal language, but you should understand the fundamentals. You should know who your decision-makers will be, who will inherit your estate, and how your family will be taken care of. Preserving your family dynamics might be at the top of your wish list. Let’s talk about how to protect those relationships.

Mistake 4: You have outdated or confusing beneficiary designations

This is by far the most common area financial, legal, and tax planning advisors deal with estate planning mistakes. If your beneficiary forms are not up to date with your current wishes, you might cut your loved ones out of their inheritance. Intent means very little when it comes to legal documentation. You can read some examples of how this little piece of paper can cause a lot of heartache and drama between family members.

Update your wishes after any major life events or changes. It’s also important to clarify your intentions. No one can follow through on your wishes if they are difficult to understand and interpret. Think of multiple outcomes: what if you outlive your spouse? What if your divorced daughter passes away first? Do you have a special needs family member? Who will care for your aging parents? Help your family and estate executors carry out your wishes by keeping your documents updated and your instructions clear.

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