Everyone want to enjoy Life. No one wants to think about death but you have to—it’s the only truth of life. As said “Life is uncertain”, Have you ever thought about what would happen with your assets after the death that you have earned through hard work?
Hence you need proper Estate planning along with Wills and Trusts. Without a trust or will, you will leave it on people or the government to decide what would happen with your entire life’s hard work (money and properties). It will legitimately cause trouble to your kids and reasons to argue with each other.
If you don’t know what trust and will means? let’s get you into the insights:
What is a Wills
Testamentary will is one of the most common types of wills which is a legally binding document stating how your property and assets would be handled after your death. It also includes instruction on how you would want your memorial and funeral held. A will is an essential element of estate-transfer, and it is suggested by an expert that you should seek professional and legal advice.
What is the importance of a will?
If you don’t have so many properties and assets, it would be okay not to have a will. However, if you have been working hard since your 90s and saving good for your kids, there are plenty of advantages to having a will.
With a will, your assets and property would be in safe hands or with someone whom you want it to be. It is suggested by experts that even if you just have a bank account, you should still consider to have a written will. You need to manage your money before you die so that it would never cause any issue among your kids.
When you have a legally binding will, your relatives and family don’t have to worry about allocating the property and asset and also dispensing the documents. It’s just like you have made the decision for them before you die. It can also avert the arguments between your kids that generally happen after the death of parents. With a will, you will let them take what they deserve. It will also guarantee the protection of your assets and your kids as well.
Steps to follow while writing a will
Once you know the importance of having a will, the next step will start creating one for the tension-free future of your children:
People often think that they will create a will after their 50 or 60 but the best time to do it is right now. After creating it, update it regularly to update changes you may have done in your assets and properties.
Here are seven steps that will help you to write your will in the best way:
1. Decide, how would you make your will
You can make your will by yourself with the help of the right software or can hire a professional to make one for you, it all depends on you. However, experts suggest seeking legal help.
To avoid numerous unwanted problems with your will, you need to assure that it is legal. It is always best to hire someone professional and authorized like an attorney for the work. This becomes more essential when you have potential assets, or your will is complex. If your financial range is modest and simple, you can just simply write your will with the online available software.
2. Make a list of your assets
Before writing a will or hiring someone, make a list of your assets. This should include everything you have—from investments to savings to property. This also includes artworks, heirlooms. And jewellery.
You can also include things that you want to give someone to keep after your death like fancy rugs, lamps or anything special to you. The list of assets can have anything owned by you.
3. Choose the receivers
One of the essential steps involved in creating a will is to know who would be the beneficiary. Make sure that you write the legal names including surnames so that there would be no issues while validating the identity.
While choosing beneficiaries, you shouldn’t list the names of your pets but can assign people who will take care of them after your death.
And while choosing beneficiaries for your properties and assets, try to be more specific. For instance, if you are giving your property to your children, make sure you have mentioned the percentage of the home given to each of your children. If you have four children, you can assign 25% of your home to each.
You can also allocate a single beneficiary for all properties and assets, or can simply distribute as per your desire. Just make sure you are choosing someone who is worthy enough.
4. Pick a legal guardian for your kids
If you have kids under the age of 18, you must include the name of the person whom you want to be your kid’s guardian when passing on. Before writing the name of the guardian, assure that they are capable and responsible enough to take care of your kids. It is always best and wise to choose someone who is close to both of you as the guardian, so it would be easy for your kids to get comfortable with them.
Must understand, before you write the name of the guardian, your kids are agreed to it. Also, tell your kids who should they turn to, if anything happens while they are under the custody of the allocated guardian. It is also smart to choose a secondary guardian if case primary one won’t fulfil their duties towards your kids in your absence.
5. Elect an initiator
An initiator is someone who is accountable for making sure that whatever you write in your will should happen after your death. Their job would be to distribute and manage assets to the potential beneficiaries.
You can choose a friend or a family member to be your executor. But if you want to take it legally, hiring a bank, or attorney would be best for you. Nevertheless, if you choose the last option, you need to be prepared for extra expense as they cost at least 2% of your assets.
6. Get the signature of witnesses
Once you are done with the will, you need to get the signature of a witness. A witness is needed to make sure that the person who is making will have the proper mental ability to write a legal document. This will make the will documents valid and legal.
Generally, you must have two witnesses who are above 18, and they shouldn’t be one of the beneficiaries. Preferably, you need to pick the witnesses younger than you, so they would be present in the court to contest after your death.
7. Keep your will documents somewhere safe
After you complete all essential things to write a will, you need to keep it safe, such as in your bank locker, or designate it to a trusted friend or family member who will give it to your children after you pass away.
You can also hire a real estate attorney to keep the legal will documents that you need to pay them as per their demand.
Now, you have all the essential key points to understand the will and how to make it. Let’s move to “trust” and have deep insights into another legal documentation.
What is trust?
A trust is a tool of estate planning that contains three essential elements. First, the grantor will create trust. Second, a trustee holds the trust properties and assets. Third and last, the beneficiary gets the benefits of the trust.
For example, a person dies at the age of 45 with his eldest son being 12-years old. This landowner, “in his will”, would allocate the power to a friend or family member to manage the assets for the benefit of his son. Here, the owner of the assets who dies is the “grantor”, the family member or friend is “trustee” and the beneficiary is the “12 year old son” of the man who dies.
Who owns the trust assets?
By using the same example, once the owner of the assets died, he no longer owns the assets. The trustee who is managing and handling the property also doesn’t own the right to hold assets legally. The 12year old kid who is a legal beneficiary also doesn’t own the assets.
Now, who owns the assets? Actually, until the beneficiary doesn’t turn 18, the trust will own the assets. It might be a piece of paper but has powers that no one can possess. The trust can legally pay taxes, hire employees and go to court. However, the trustee can be its human epitome.
How does a trust can guard your children and spouse?
If you designate your assets and property into a well-managed drafted trust followed by required laws, the trust owns the assets for the benefits of your kids and spouse. Your family doesn’t own the property, it is owned by the trust. If your family has creditors, they can only take what your children and spouse own.
Your family doesn’t hold the owners of what is in the trust. So, the creditors can’t take the property mentioned in the trust. Moreover, if your spouse remarries after you pass away and they get divorced, their second spouse can’t reach the trust’s assets.
Here, Trusts clarified for immigrants
1. Mrs John is a widow with two adult daughters. Her daughters are married, but she worries that her assets which she wants to give her daughters only may end up with her son-in-law. What should she do to avoid this scenario?
She hired a real-estate planning lawyer who will draft a will that systematizes trust for each daughter. After her death, her money would equally be separated into two trusts. Each daughter is the trustee of the trust. The cost to manage the trust would be nothing.
Now, her first daughter is divorced, her trust would not be part of her marital assets, her husband would get nothing from the trust.
If in case, her daughter passes away, Mrs John’s assets would give to her daughter’s kids. And, this cycle will remain to revolve to her descendants.
2. Mr Kim is worried that her wife Mrs Kim might be taken advantage of after his death. He hired a real estate planning attorney to draft a trust of his assets. After the death of Mr Kim, the owner of the trust would be his wife. He made his son the co-trustee of the trust which means her wife alone can’t sign any check and the same is applicable to the son. They both required to sign the check for a particular payment. Through this, if anyone tries to scam his wife after his death, his son would know about it immediately as she can’t alone get the check cleared.
The money is safe in the trust. Mr Kim can also hire a legal company or bank to be the trustee. In this way also, his money and wife are safe to get cheated. However, banks and legal companies would charge their fees to guard the trust.
3. Mr and Mrs Wang want to leave their investments for the education of their progeny. They will hire a real estate planning attorney to draft a will that creates an “education trust”. After their death, the trust will keep the money safe from their kid’s creditors and divorces. The trust will continue to pay the tuition fee of their grandchildren and great-grandchildren forever.
Is creating trust is expensive?
No! trusts are not expensive. Most governmental authorities have stated trust acts that allow real-estate planners to form a trust. They will not charge you much to create trust. For no-cost, they will speak about your current situation, develop the strategy and give you quotes of their services. But, once you get involved in the process, you will see how inexpensive it is to secure your assets for your family.
Are you ready to create will and trusts for the security of your family after your death? A will and trust are important aspects of every adult. It sets out what you want to happen after your death legally. It not only makes it clear what you want to happen but also ensures that your finances and possessions are allocated to the right people.
So, if you don’t have a will yet, make one now and today is the best time. Or, you already have a will and you want to update it, seek the help of professionals now. We hope that you will find this article helpful and it cleared all your doubts about trust and will. If you still don’t have both of them, hire professionals to create these essential legal documents for the safety of your possessions and family in future.