I refer to myself as an estate planning attorney, and I prepare estate plans. Oftentimes I will be asked what that means, and I explain that I help people prepare their will, trust, financial power of attorney, medical power of attorney, living will, or other documents related to the end of life. People either understand my further explanation, or have at least heard of the documents I list, so they tend to respond to the explanation by saying something like, “Oh, I get it.”
However, some people seem to have an almost angry reaction of, “Well, why didn’t you just say that in the first place?!?!?!?” I am not entirely sure why the words “Estate Planning” evoke such a strong reaction. I promise I am not trying to hide what I do, or to confuse anyone, or even make myself seem as if I am more important than I actually am. I am just using the general terms for planning for the end of life and distributing assets at death: Estate Planning.
The planning part of estate planning is important. As one of my business taglines, I say “Have a Plan, not Just Documents.” Setting up a will to distribute assets at your death is great, but the plan for how to distribute assets through a will is the substance of the will. If you have a trust, your estate plan is structured differently than if you just have a will. Inside either a will or a trust, the plan of what to do with your assets is vital.
The plan inside of a will or trust is what makes a will or trust worth having, and what makes the will or trust useful. Let me explain: Your will or trust is how you implement your plan, and it is the plan for what you want to do with your assets that drives the entire structure and setup of a will, trust, financial power of attorney, medical power of attorney, living will, or other documents.
Using a Will to Carry Out Your Plan
A will is the foundational document of any estate plan. In a will, you dictate who should get your assets when you pass away. This is the substance of the will, and the most important part. Your will implements your plan for your assets. If you want your assets to go to your children, then that is your plan, and the will is simply the written document that implements your plan. Your will reflects the plan that you have for your assets, so the plan is what dictates how your will is written. You want the will to reflect your plan, and to implement your plan.
In your will, you also choose who will be in charge of carrying out your plan. The person in charge is called a personal representative. The personal representative must carry out the distributions in your plan, and follow your directions. You want to choose someone capable and reliable to carry out your plan, as described and outlined in your will. Choosing the right person to follow your instructions in your will is part of the plan, so you need to choose wisely.
Using a Trust to Carry Out Your Plan
If your plan includes controlling property after your death, then a trust may be helpful and useful to you. A trust may be set up by a will, or may be set up while you are alive. A trust set up by your will is called a contingent trust, or testamentary trust. Such a trust is often established by a will to care for minor children.
Two of my children are teenagers, and one is nine years old. If my wife and I pass away, then life insurance money will pay out, and that money will exist to pay for my children’s upbringing. I don’t want my teenagers or nine year old to get a bunch of money outright while they are so young, so my will is set up to establish a testamentary trust for them. That way, my sister can use the money to raise my kids, but the kids don’t just get the money outright. My plan for my children is reflected in my will with a contingent trust.
Because I don’t have a lot of current assets, and life insurance will only pay out after I have passed away, I don’t see the need to set up a trust while I am alive. I have written blog posts about why you may want a trust, but I don’t think I need a trust right now. Instead, I only need to set up a trust for the future, if I die and life insurance money pays out. Many of my clients are in a different position, as they have more significant assets to distribute, or property in multiple states, or other reasons they may want to set up a trust now, instead of making the personal representative do the work through the probate process for a will.
Setting up a trust now means that you end up doing a lot of the work now to get assets into a trust. A trust set up while you are alive is called a living trust, or inter-vivos trust, and can help reduce the burden on your personal representative, usually your children. Setting up a trust now appeals to many people who want the whole process of transferring assets to their children to be as easy as possible. The trust itself may not be short, or simply written, but the process to payout from a trust can be much simpler than going through the probate process the courts have set up. If part of your plan is to make things easier on your kids when you pass away, then a trust may be the best way for you to implement your plan.
Your Plan Is Reflected In Your Documents
Whether you need a will or a trust is largely determined by what you want to do in your plan. Your life situation is unique and your plan is likely a bit different than everyone else, meaning you want your documents to reflect your plan. If your plan includes giving assets outright to your beneficiaries or heirs, then a will can likely implement such a plan. If you need to control assets after death, or you want to avoid probate as part of your plan, then a trust is likely the way to go. Your plan dictates which documents should be written, not the other way around.
Talk to An Experienced Estate Planning Attorney to Implement Your Plan
You may not be able to put into words what your plan is right now. By talking to an experienced estate planning attorney you can discover more about your plan and help it take shape. An experienced estate planning attorney has many questions to ask that will help understand your plan, even if you can’t just state your plan flat out. An experienced estate planning attorney can help guide you through the various documents to implement your plan. That is why the attorney you choose to work with is an estate planning attorney, not just a wills or trusts attorney. The attorney will work to understand and implement your plan, and not just write you documents, although the attorney does that, too. To make an appointment to help discover your plan and get it going for you, go here.