by Bill Miller | Apr 27, 2018 | Estate Planning
You may be asking yourself, should I use a trust-based or will-based estate plan? Estate plans are often developed around one document. Of course, a “will-based” plan builds around a Will and requires probate at your death. And the “trust-based” plan is a plan based on a trust and avoids probate at your death. That doesn’t sound too difficult. However, as you prepare to work on your estate planning, it’s important to know and understand the differences between the two plans.
Wills vs. Trusts
A testator signs a Wills so that people know how to dispose of their property after they pass away. Wills often state who will serve as executor or personal representatives. Special gifts called bequests will be made. When a testator has children, the Will states who will care for the children if the testator passes away.
Trusts also involve disposing of property. When the trustor signs the trust document, he or she creates the trust and names the beneficiaries. Then, the trustor funds the trust by transferring assets to it. Sometimes people will use a living trust and a pour-over Will. Assets not transferred to the trust prior to the testator’s death are transferred by the pour-over Will. This is called a trust-based plan even though both a trust and a Will are used.
Which is Better – the Will or the Trust?
That depends on your goals and what concerns you the most:
- Would you and your family like a little privacy? Wills become public record upon being filed for probate. Any member of the public can view court records, read your Will, and know your personal business. Trusts, however, do not become part of public record. So, your neighbor can run to the courthouse to see a copy of your Will, but not your trust.
- Is it important to have a speedy, cost-effective distribution of estate assets? The property in a Will-based plan has to pass through probate before being distributed. However, most of the time trust-based plans transfer estate assets to beneficiaries more quickly. The assets don’t pass through the court system first.
- Is asset protection a consideration? Wills distribute assets, but do not protect them. Some Trusts can provide asset protection depending on the type of trust chosen.
- Do you want to pay costs up front or long-term? Trusts generally cost more to put together than Wills. However, trust assets typically avoid probate, as well as the associated court costs and legal fees that will be incurred when you pass away.
- Do you have concerns about your family fighting when you pass away? If so, a trust may be a better option. Since a Will requires probate, it is a court proceeding. A court proceeding means that all heirs are entitled to notice and can contest the terms of the will. A trust does not go through probate. Therefore, there is no court proceeding and it is less likely that your children/family will have anything to fight about.
Talk to Us About Your Estate Plans.
Facing incapacity is the first step. Take the next step by talking to a qualified Alabama Estate Planning attorney. The lawyers and staff at Miller Estate and Elder Law, help clients deal with both emergencies and advanced planning. Schedule an appointment by calling 256-251-2137. We help clients in Anniston, Talladega, Birmingham, Gadsden and surrounding communities.
by Bill Miller | Apr 24, 2018 | Estate Planning
Sometimes, we put things off too long. Marcie’s grandmother, Hazel, had talked about writing a Will for years. She even tried handwriting one herself because she refused to hire an attorney. Marcie knew she should encourage her grandmother to finalize her estate plans, but she just never got around to it. Then Marcie noticed Hazel was becoming more forgetful. By the time Hazel saw an attorney, it was too late.
Mental capacity is defined as
“sufficient understanding and memory to comprehend in a general way the situation in which one finds oneself and the nature, purpose, and consequence of any act or transaction into which one proposes to enter.”
Valid Estate Planning Issues.
For a Will to be valid in Alabama (and most other states), the person signing the Will (the testator) must be “of sound mind.” This may also be called “testamentary capacity.” The testator must understand:
- that he or she is making a Will,
- what property makes up their estate, and
- that they are disposing of their estate assets through the Will.
Marcie took her grandmother Hazel to an attorney to prepare her Will. The attorney will pay attention to whether Hazel understands the three things mentioned above. If she does not, Hazel will not be able to prepare and sign a valid Alabama Will.
Another estate planning document is the durable power of attorney. Similar to the Will, the person executing the durable power of attorney must be able to understand his or her actions. Oddly enough, one of the main reasons for signing the durable power of attorney is because it remains effective in the face of the principal’s incapacity.
In Marcie’s situation, her grandmother no longer could understand the documents she was being asked to sign. Because she had no estate planning documents, and was unable to continue caring for herself, Marcie filed a petition to become Hazel’s guardian. When Hazel dies, unfortunately her family will probably have to settle her estate through probate.
Don’t Wait to Prepare Your Estate Plan.
Estate planning documents deal with important issues in a person’s life. Understanding what a legal document does is critical. Don’t wait until you are incompetent or incapacitated to get your plan in place.
Schedule a free consultation with the attorneys at Miller Estate and Elder Law Our attorneys know how to help people like you. Just give us a call at 256-251-2137 or use our Contact Form to set up an appointment. Serving clients in the greater Anniston area, including Birmingham, Talladega, and Gadsden.
by Bill Miller | Apr 13, 2018 | Estate Planning
Anthony sighed with relief. He felt a great peace of mind the day he finally signed his estate planning documents. His Will showed how his property should be distributed in an orderly and organized fashion. The durable power of attorney he signed meant that someone would stand up for him if he was no longer after to handle his medical or financial affairs. He had even signed a Living Will telling everyone to keep the doctors from artificially prolonging his life. Then he started to wonder about his children: Anthony, Jr.; Talia, Lorraine, and Chad. They’re all adults, but Anthony wondered if they needed his help with their estate planning.
We’ve talked before in this blog about talking to your family about estate planning. But that discussion was about your estate plans. It’s time for a new discussion.
Now, it’s time to talk to your family about their estate plans.
But, how? Death and incapacity are touchy subjects.
Tell Them About Your Experience
Maybe you have always wanted to take care of your legal matters but kept putting it off. Then, one day, you took a big step and called an attorney to talk about making a Will. Your attorney explained how necessary estate planning is and helped you come up with a plan that meets your needs. Better yet, you now know how much the estate plan will help your loved ones adapt after you’re no longer there to help them. Finish off by telling them what a great sense of relief and peace of mind you have now.
Tell Them What You’ve Learned About Estate Planning
Especially tell them what happens when you don’t have any plans in place.
- Probate without a Will is more difficult and expensive.
- Precious time is lost trying to settle an estate without an instruction book (your estate plan).
- Your family may pay more taxes than necessary because you didn’t plan.
- Your family may receive less of your estate than you intended because of attorney’s fees and court costs.
- Medical providers will need someone to make medical decisions, but who?
Lay Out the Arguments for Estate Planning
If they have kids, start there. Your children need to understand what happens when a good Will is not in place.
Most estate plans include a durable power of attorney to address incapacity issues. Not signing one makes a serious situation so much more stressful.
Do you really want your family to struggle making end-of-life decisions for you because you didn’t leave a Living Will? Or worse, do you want a court to do so?
Estate planning is your voice, after you can no longer communicate. It’s a way of showing extreme love for your family, both now and later.
And you don’t have to be old or wealthy to have an estate plan. Everyone needs one!
Set a Good Example
There are many reasons to put together an estate plan. Here’s another one: You’ll be setting a good example for your children, no matter how old they are.
Help Your Kids Help Themselves
We are assuming that you have already done your estate planning. If you haven’t, this is the time.
Schedule a consultation with one of our attorneys. They have the experience and skills to listen to your concerns and put together a complete estate plan. Our phone number is 256-251-2137, or you may want to use the Contact Form on our website. We have office in in Anniston and Birmingham and assist clients in communities like Hoover, Vestavia Hills, Irondale, Gadsden, Pell City, Leeds, Trussville and Calera.
