Estate Planning With Trusts

Assessing your financial well-being should not only be about how much you have in your checking, savings, brokerage, retirement, and investment accounts, or whether your assets (house, cars, boats, priceless arts, etc.) can be cashed, i.e. sold, to cover your liabilities (credit card debts, student loans, mortgage, etc.), it should also focus on making legal provisions to manage and protect these assets.

Managing your assets/wealth must involve both financial and estate planning. One without the other is like carrying half an umbrella for a rainy day—you are not fully covered for the legal mayhem. A smart financial advisor can plan for you to have sufficient funds/assets to cover you well into your retirement, but a wise financial advisor will make sure you talk to an experienced estate planning attorney who can legally help you plan and manage your assets long after you are gone.

Making Sure You Have the Final Say

Estate planning is an essential step in protecting and providing for your loved ones upon your death. It is also a powerful means through which you can control your assets and have the say as to how you wish to dispose of your assets, without the courts applying the default rule of intestate. For example, under Massachusetts intestate estate law, any part of a decedent’s estate that is not disposed of by a will, or the person dies without a will, i.e. intestate, the decedent’s estate passes by intestate succession to the decedent’s heirs. Imagine the mean cousin, who never liked you, inheriting your entire estate because you did not make the necessary estate planning to dispose of your property as you deem fit.

Revocable Living Trusts and Wills

Trust and will are the two most recognizable legal tools used in estate planning. If you plan on setting up a trust you must also draft a will because a trust is not a substitute for a will. You may have a will without a trust, but not a trust without a will. A trust may be active during your lifetime or upon your death, depending on the terms and type of trust. A will on the other hand is only executed upon the death of the testator (the owner of the will).

A living trust, also known as a revocable living trust, is a trust you can establish, manage and control during your lifetime. You also have the power/right to amend or revoke a revocable living trust, thus the name “revocable.” However, a revocable living trust becomes an irrevocable trust, which means the terms of the trust can no longer be amended/changed or revoked, when you relinquish control of the trust or upon your death.

A will (or a “pour-over” will), drafted with a trust in mind, acts like a safety net to take care of any assets that were not titled in the name of the trust, by “pouring” those assets into the trust upon the testator’s death. The assets in the trust will pass according to the trust document and do not go through probate. The trust then becomes the ultimate operating document upon your death.

A properly drafted will allows you to have the final say upon your death. Without a will, the court gets to have the final say on your assets disposition. Also, like a revocable trust, during your lifetime you can amend/change or revoke your will by replacing it with a new will.

Drafting a trust or a will is best left to an experienced estate planning attorney because the language of these documents can easily be challenged by an unhappy heir or beneficiary in court.

The purpose of estate planning is for you to have the final say in the disposition of your properties. You do not want to leave this decision to the courts. Contact an experienced estate planning attorney at the Law Offices of Johnson, Sclafani & Moriarty to discuss your estate planning needs.

 

 

 

Resources:

https://www.mass.gov/doc/article-ii-intestacy-wills-and-donative-transfers/download

http://divorcebankruptcylaw.com/wills-and-trusts/

This article is posted on behalf of Johnson, Sclafani & Moriarty, Attorneys at Law August 18, 2020.