If your attorney is recommending that you create a living trust, you might want to listen to him carefully as he may have your best interests, and your family's best interests, in mind. Although a living trust won't be in the cards forever, there are some important benefits that could save your family a tremendous amount of time and money later on down the road. Here are some of the most essential benefits of a living trust:
Skip probate
People don't create a living will in order to "do" something. Rather, a living will is designed to give helpful information and set rules and guidelines to be followed by medical practitioners and family members when someone receives care but no longer has the mental capacity to direct it. As such, unlike a will — which distributes an estate planner's assets after he or she has passed away — the living will is there to provide information and guidelines about medical care.
Your living will is can be set up in a general or specific way depending on your needs. You can include details that state exactly which medical procedures you want performed in which situations, or you can leave things more general and simply provide basic guidelines and limitations. Also, you can use your living will to name the person whom you want to make medical decisions on your behalf.
A trust can own property and assets, but it's not a person, so it seems like it could live on forever -- guarding your assets for eternity or for so long as they remain. However, just like everything else, trusts must eventually come to an end too.
The most typical way for a trust to end is when the property within it is exhausted. Perhaps the trust was full of stocks or other investments and the value of these investments declines to zero. The trust might not have any further assets left to support itself and its beneficiaries. Or, maybe the trust assets are completely paid out to the beneficiaries at a certain point and nothing remains of the money or property.
Nobody likes probate proceedings because it takes time to complete, and it can represent an additional expense after your loved one dies. However, the probate process is usually going to be necessary and -- to a certain extent -- unavoidable. With a sound estate plan, you can bypass probate for some of your assets, but whatever remains of the estate itself may still need to go through probate proceedings.
If you're about to begin this important legal process, you may want to review and understand the following steps:
Sometimes Massachusetts residents decide that they want to do some good in the world while also receiving some benefits themselves. One way to do this is to create what's called a charitable remainder trust. This kind of trust has one or more named beneficiaries. The beneficiary could be a loved one. It could even be yourself.
The charitable remainder trust makes prearranged payments to you or the beneficiaries, usually until death. Then whatever remains will be given to the charities you select.
If you're still married to the parent of your children, then protecting your children's inheritance won't be a primary concern, since your spouse (the kids' other parent) will leave your assets -- and what's left of your marital estate -- to them after death. On the other hand, if you have children from a previous marriage, the ties that bind your current spouse (the stepparent) to your children will probably not be as strong.
Because of the way marital property and Massachusetts intestacy laws work, if you die without a will, your current spouse may be able to take a lot more of your individual assets and the marital estate than you wish. Even though your children will have some inheritance rights related to your individual property -- which they can assert in probate court if necessary -- dying without a will could leave your children with much less than you had planned.
Many Massachusetts residents would agree -- some in jest and some quite seriously -- that their pets are more important members of their family than their children. For this reason, a lot of estate planners ask their attorneys how they can make a plan to ensure their pets are well-taken care of when they're gone.
Fortunately, estate planners have a lot of options when it comes to preparing for their pets' care. One of those options is the creation of a "pet trust." Here's what you should know about a pet trust:
Imagine you want to leave $200,000 to your only surviving relative. The problem is, this individual is only 18 years of age, and has not exhibited an ounce of financial responsibility in his entire short life. You may definitely be concerned about leaving such a large amount of cash to your heir. Not only is there the chance that your beneficiary will quickly spend the money irresponsibly, but -- if your relative has a substance abuse issue -- the money could be extremely dangerous to his health.
It's situations like these that could benefit from a spendthrift trust. A "spendthrift" is an old word used to describe someone who wastes his or her money without a care toward the future.
No matter who you are, if you're an adult, it's to you and your family's benefit to draft and execute a legally valid last will and testament. Indeed, your will is one of the most vital documents in your estate planning arsenal. However, if you don't create your will in compliance with state laws in Massachusetts, your efforts to draft the document could be wasted.
There are some thing you need to know about will creation in Massachusetts. You must draft your will, which is preferably printed or typed, and sign it. In some cases, if the testator is unable to sign the document, he or she can direct another party to sign it instead.
There are many trusts to choose from when you are going through the process of planning your estate. Learning about all of them can feel time-consuming and overwhelming. However, it is important to do so in order to make the best decision for your estate and beneficiaries.
A testamentary trust is unique because it is not in existence during the lifetime of the estate planner. Instead, it comes into effect at the end of the estate planner's lifetime.
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