Where there's a will, there's a way
|A will is the foundation of any estate plan. It specifies who gets your property when you die and lets you name a legal guardian for any minor children. It also names an executor, the person responsible for managing your estate. However, a will must pass through probate, the process where a state court publicly confirms the will’s validity. This can take months. A properly executed trust can avoid that. More importantly, any assets outside of a trust are subject to court costs, legal fees, taxes, and unforeseen conflicts with heirs.|
Trust in a trust
A trust helps ensure that your assets will continue to be managed according to your wishes after death.. Two common types:
• Testamentary trust: Created through a will and takes effect after you die and the estate passes through probate.
• Living trust: Takes effect while you are alive. It can be revocable meaning it can be changed, or irrevocable meaning it cannot.
• Dynasty Trusts - Kentucky recently changed a key rule. Now Kentucky law allows a trust to continue on from generation to generation indefinitely.
Choosing an executor or trustee
|The choice of executor or trustees can be critical to the successful execution of a will. You may want to name your spouse as executor of your estate. But what if your spouse is distressed and unprepared to manage financial affairs? Consider naming a corporate executor and trustee. A corporate trustee can professionally manage assets according to the deceased’s wishes and help complete necessary paperwork so family members are not overwhelmed. Co-trustees share responsibility for the trust and usually have the same authority.|
Who's managing your money if you can't?
It’s natural to think of estate planning solely in terms of planning for death. But what happens to your finances if you become mentally or physically incapacitated? In this situation, a revocable living trust can be a powerful tool.
You can create a revocable living trust and name yourself as trustee. As long as you are mentally and physically able, you retain complete control over the assets in the trust. Should you become permanently disabled or incapacitated, the trust becomes irrevocable. Your successor trustee steps in to manage your assets according to the trust’s provisions.
More estate planning tools • Durable Power of Attorney: You name someone to transact business and handle your affairs even if you become incapacitated.
• Living will: Allows you to spell out what treatment you want to receive in the event of a serious injury or illness and who has the authority to act on your behalf.
MICHAEL A. O'HARA, PLLC