Friday, November 5, 2010

How to Prepare a Living Trust vs. a Will

When planning the execution of a legal document for the disbursement of assets after you die, your fee to consult a competent attorney, accountant, or other trusted professional  will be money well spent. This article is only intended to provide a broad overview of the subject, so you can be more knowledgeable in exploring options, and better prepared to meet with professional advisors.
What is a Will from, a Will is a written document which leaves the estate of the person who signed the will to named persons or entities (beneficiaries, legatees, divisees) including portions or percentages of the estate, specific gifts, creation of trusts for management and future distribution of all or a portion of the estate (a testamentary trust). A will usually names an executor (and possibly substitute executors) to manage the estate, states the authority and obligations of the executor in the management and distribution of the estate, sometimes gives funeral and/or burial instructions, nominates guardians of minor children and spells out other terms. To be valid the will must be signed by the person who made it (testator), be dated and witnessed by two people (except in Vermont which requires three.) North Hollywood Hospice
Also defined  in  the legal dictionary on, a Living Trust is created by a declaration of trust executed by the trustor during his/her lifetime, as distinguished from a "testamentary trust," which is created by a will and only comes into force upon the death of the person who wrote the will.

Most commonly, it is a trust in which the trustor receives benefits from the profits of the trust during their lifetimes, followed by a distribution upon the death of the trustor, and the trust continues on for the benefit of others (such as the next generation) with profits distributed to them.
Some Advantages of a Living Trust over a Will.
Many estate planners swear by living trusts; their advantages over wills are many. The problem with a will is that it must be proved valid in probate court. To probate a will, you'll definitely need to hire an attorney and attorney's fees can run into thousands of dollars. There may be executor's commissions and other court costs.
California's probate fees -- set by law -- are about average among states. For an estate of $500,000 (by no means a small or uncommon estate where home prices start around $200,000), the cost of probate in terms of attorney's fees and executor's commissions would range around $22,300. This is a big chunk out of your children's inheritance.
Worse than the financial blow, probate can exact an emotional toll on the surviving family. Your heirs may have to wait several months and sometimes years to collect their inheritances, depending upon the efficiency of the executor, attorney and probate court. Delays of eighteen months to two years are not unusual. Granda Hills Hospice
Probate records are public records and are available to all kinds of salespeople, scrupulous or otherwise. Many a widow has been persuaded to make unwise or unsuitable investments under pressure from fast- talking hucksters.
Living Trusts, on the other hand, require no court proceedings; a successor trustee (who may also be a beneficiary) simply distributes the assets according to the trust's instructions and dissolves the trust. The process is much quicker, cheaper and more private than settling a will.
Few Disadvantages
According to most estate planners living trusts have few disadvantages. Most trust instruments are relatively simple to prepare, and you need to formally transfer the title of various assets to the trust. This requires some paperwork and you will need to contact your banks, brokers, insurance agents, etc. In most cases, they are familiar with living trusts and you should get expert cooperation from them. Once this paperwork is completed, a living trust will not affect the way in which you control or manage your various assets.
Remember, there are many complex issues involved that are not covered here that only a qualified professional can address. Individual state laws vary greatly on a multitude of specifics and have a significant bearing upon the issues and decisions you face.
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