Top 10 Reasons to Make a Will or Living Trust
1. Name a guardian for your minor children.
2. Set aside money for your dependents or children from a prior relationship if you are part of a blended family.
3. Control who inherits your property.
4. Arrange for the care of your pets and animals after you’re gone.
5. Fulfill a goal of gifting to a favorite charity or your alma mater.
6. Prevent a dispute between your heirs.
7. Make things easier for your spouse, partner, children and other family members.
8. Choose the executor or trustee who will manage your estate.
9. Make provisions for how estate taxes should be paid.
10. Create a business succession plan.
There are several reasons you should have a will, and in some cases, a living trust. If you have children under age 18 and die without a will, custody of your children will be given to whomever the court appoints. Your children could end up in foster care or a group home. By executing a simple will form, you can name a guardian for your children.
If you have a dog, cat, bird, horse or other family pets, they could be turned over to a pound or animal shelter if you die without arranging for a pet caregiver to take ownership of them in the event of your death. If you do not have an estate plan that makes financial arrangements for their care, your animals could be euthanized after you die. The only way to ensure your animals are cared for after you die is to execute a will and a pet trust.
If you die intestate, meaning without a will, state law determines who gets your property. Often, this means your property will not go to the people you want to inherit your estate. In some states, a surviving spouse only receives a life estate in the property of the deceased, with the children inheriting title to the family home. In other states, the surviving spouse inherits one-half of the estate and the children receive the other half. If you have no children, your surviving spouse may have to share your property with your parents or siblings. If no relatives survive you and you die without a will, your property passes to the state. For more information on how your property will be distributed under the laws of intestate succession if you die without a will, visit our page on Dying Without a Will.
Basic Wills
When you are ready to make your Will, you should consult an estate planning attorney licensed in your state. You may be concerned about the cost of hiring an attorney. However, you will likely save money in the end by getting valuable advice, as well as financial and tax planning strategies from an experienced estate planning attorney. All too often, people with very good intentions create their own Wills, or amend their existing Wills with a Codicil, and assume they have done okay. Later, after it is too late, it is discovered they made a mistake that caused their Will to be invalid and unenforceable. There are very important formalities that must be followed when executing a Will. If you are not trained in the law, you may simply overlook these formalities, thinking they are unimportant. But these formalities must be followed to the letter. It is better to work with a trained professional that can ensure your Will or Codicil is properly executed.
If you fail to consult an estate planning attorney, you may miss out on valuable strategies, including potential tax savings, that could greatly benefit your family. See our list of best selling Will and Trust Books for help getting started.
Revocable Living Trusts
One of the primary reasons to create a Living Trust is to avoid the costs, delays, and public disclosure that results from having your estate pass through probate. Certain types of trusts also incorporate estate tax strategies.
Most Living Trusts are revocable which means you can revoke the Trust at any time during your lifetime. If you make an "Irrevocable Living Trust", you cannot rescind the trust.
When you create a Living Trust, you create a Living Trust Agreement and "fund" the trust with your property by changing title to property so your assets are held in the name of the Living Trust instead of your own name. As the grantor, provided you also name yourself as the original trustee of the trust, you have legal control over the assets in the trust until you die or become incapacitated, at which time the successor trustee you named in the trust will have legal control over the trust assets. Upon your death, the successor trustee simply completes some paperwork with a notary and all property included in the trust can be quickly transferred to the beneficiaries without probate.
You may not need a Living Trust if:
1. You own minimal property and therefore have little concern about probate expenses.
2. Your property is already titled in such a way that it will automatically pass to your desired beneficiaries without Probate, such as joint tenancy in real estate or pay on death bank accounts.
3. You have significant debt problems and want to use probate as a way to deal with creditor claims against your estate.
4. You don't have anyone you trust to serve as trustee of your Living Trust after you die.
If you already have an existing Living Trust and want to make minor changes to it, you can do so in a properly executed Trust Amendment. See Living Trust for information on how to amend a Living Trust.
Other Types of Trusts Used in Estate Planning
There are many different types of trusts. For more information on the types of trusts that can be used as part of your estate plan, see our page on Types of Trusts.
The Impact of State Law on Your Estate
The requirements for making a valid will, the laws regarding intestate succession, and probate laws vary from state to state. To ensure your property can be distributed in the manner you intend and to make your will enforceable, you must follow the laws of the state where you are domiciled. See our pages on State Laws and Fatal Errors in Execution for more information.