The use of wills and trusts can help ensure that your wishes are carried out. Here are some examples of how you can use them.
Surprisingly, 55% of Americans don’t have a will, but they’re crucial documents since they direct the distribution of your assets after your death. Without one, state laws determine who gets your assets, and your heirs may face delays and expenses trying to claim their inheritance. Here are some key facts about wills:
- Creating them does not have to be expensive. You can write your own valid will with the help of a variety of online and other sources. To ensure that the document is accurate and effective, it may be advisable to consult an attorney.
- As part of creating a will, you must choose an executor responsible for distributing your assets and ensuring your wishes are carried out. Make sure you let your chosen executor know that they have been named in your will to make sure they understand their duties.
- Determine who gets what. Provide specific information about the person (or, perhaps, a charity or other nonprofit) who will inherit and what they will receive.
- A guardian can be named in your will for minor children if you die. Ensure that the guardian can take care of your children by discussing this choice with them. In the event that you fail to name a guardian, the court will appoint one for you.
- Depending on your state, you must sign the will along with two or three witnesses. Notarization may be required by some states as well.
- Maintaining a current will is essential. Changing your name, getting divorced, having a baby, or losing a family member may require you to update your will.
Trusts transfer assets between individuals during their lifetimes or after their deaths. A trustee, for example, maybe a financial institution or another trusted source, holds the trust assets. The following are important details about trusts:
- Among the assets, you can place in a trust are cash, investments, and real estate.
- Trusts can be used to determine how and when assets are distributed. If you don’t want your children to receive their entire inheritance when they’re still young, you might set up a trust so that the money or assets are distributed over time or at a certain age.
- Because of the needs of different people, there are various types of trusts. It is possible to set up trusts that set aside money for multiple heirs, among other goals. You may be able to include money for your grandchildren in a generation-skipping trust. At the same time, your spouse may be able to receive interest or earnings on an inheritance that will eventually go to your children.
- It may be possible to minimize estate taxes by using trusts.
- Avoiding probate can prevent the sometimes lengthy legal process associated with wills. Beneficiaries generally receive their inheritance at the time specified in the trust.
- However, setting up a trust can be expensive. A good CPA or attorney can help you determine which option is best for you and whether you can accomplish your goals with a will.