CLA Estate Services is based in Texas and has been helping seniors understand their estate planning options in order for them to make informed decisions about their estates for over 20 years. Many of the questions CLA Financial Services consultants hear when they discuss senior estate planning concern the differences between wills and living trusts.
Wills and living trusts are two different legal devices that determine how your belongings and assets will be distributed after your death. Each of them has specific advantages and disadvantages, and a client must consult with an attorney to understand asset financial advice clearly before deciding which is the best option for your circumstances.
What a Will Does
A will is a recognized legal document that lays out your wishes about the distribution of your property and assets. In a will, you name each of your assets and designate the person or organization that you want to have that asset after your death. You can also designate an executor - a person who will be responsible for seeing that your wishes are carried out. The executor of your estate will be responsible for seeing to the settlement of any debts you leave, arranging for payment of any taxes due on your estate and managing the disbursement of your assets.
The major drawback of a will is that it must be probated in the county in which you resided upon your death and in each county where you owned real property. Probate is a legal process where the will is submitted to the Probate Judge who will rule on the validity of the will. There are several steps that must be taken in order to probate a will before any assets can be distributed. Unfortunately, the probate process can, at times, be very time consuming. While some can be very short, some can take years to finalize. Because of the intricacies involved, many people elect to utilize an attorney to help them with the probate process. The costs associated with probate vary greatly and the truth is it is unknown how much it will cost to probate a will after death.
What a Living Trust Does
A revocable living trust is established while you are still alive. When you establish a trust, you transfer ownership of most of your assets to the trust and designate a person - often yourself - to manage those assets. You also designate a successor trustee to manage those assets if you become incapacitated or when you die. Depending on your specific circumstances, a living trust can make the transfer of your property to your beneficiaries more orderly and efficient, help you avoid estate transfer taxes and ensure that your surviving spouse, children or other heirs have immediate access to the resources they need without having to wait for probate. You see, assets in a trust are not probated or overseen by a judge, the trust document will tell the successor trustee how distribute or use the assets in the trust. This basically allows you to control your assets even after your incapacitation or death.
The major drawback of a trust is that it is a proactive planning tool. It takes time now to establish the trust and transfer your assets into the trust. The transferring of assets into a trust is called funding. If assets are not funded into the trust, then they fall outside of the trust and may need to be probated. As such, funding is a critical step to ensure that a trust will operate as designed upon incapacitation or death.
For many retirees, the complexities of estate planning combine with the natural human tendency to avoid uncomfortable conversations can lead to confusion about the various planning tools available that can help ensure your family is cared for when you're not able to make decisions for them. At CLA financial services, we understand the complexities involved and can help you coordinate your planning with attorneys and CPA's to ensure that your planning is in place when you will need it the most. Planning for the future and getting asset financial advice is too important to put off till later.
Wills and living trusts are two different legal devices that determine how your belongings and assets will be distributed after your death. Each of them has specific advantages and disadvantages, and a client must consult with an attorney to understand asset financial advice clearly before deciding which is the best option for your circumstances.
What a Will Does
A will is a recognized legal document that lays out your wishes about the distribution of your property and assets. In a will, you name each of your assets and designate the person or organization that you want to have that asset after your death. You can also designate an executor - a person who will be responsible for seeing that your wishes are carried out. The executor of your estate will be responsible for seeing to the settlement of any debts you leave, arranging for payment of any taxes due on your estate and managing the disbursement of your assets.
The major drawback of a will is that it must be probated in the county in which you resided upon your death and in each county where you owned real property. Probate is a legal process where the will is submitted to the Probate Judge who will rule on the validity of the will. There are several steps that must be taken in order to probate a will before any assets can be distributed. Unfortunately, the probate process can, at times, be very time consuming. While some can be very short, some can take years to finalize. Because of the intricacies involved, many people elect to utilize an attorney to help them with the probate process. The costs associated with probate vary greatly and the truth is it is unknown how much it will cost to probate a will after death.
What a Living Trust Does
A revocable living trust is established while you are still alive. When you establish a trust, you transfer ownership of most of your assets to the trust and designate a person - often yourself - to manage those assets. You also designate a successor trustee to manage those assets if you become incapacitated or when you die. Depending on your specific circumstances, a living trust can make the transfer of your property to your beneficiaries more orderly and efficient, help you avoid estate transfer taxes and ensure that your surviving spouse, children or other heirs have immediate access to the resources they need without having to wait for probate. You see, assets in a trust are not probated or overseen by a judge, the trust document will tell the successor trustee how distribute or use the assets in the trust. This basically allows you to control your assets even after your incapacitation or death.
The major drawback of a trust is that it is a proactive planning tool. It takes time now to establish the trust and transfer your assets into the trust. The transferring of assets into a trust is called funding. If assets are not funded into the trust, then they fall outside of the trust and may need to be probated. As such, funding is a critical step to ensure that a trust will operate as designed upon incapacitation or death.
For many retirees, the complexities of estate planning combine with the natural human tendency to avoid uncomfortable conversations can lead to confusion about the various planning tools available that can help ensure your family is cared for when you're not able to make decisions for them. At CLA financial services, we understand the complexities involved and can help you coordinate your planning with attorneys and CPA's to ensure that your planning is in place when you will need it the most. Planning for the future and getting asset financial advice is too important to put off till later.
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