Your Primer on Wills and Trusts During Coronavirus
Not Just for the Wealthy and Elderly
The coronavirus has forced everyone, regardless of age, to reckon with their own mortality. We are seeing an uptick in non-senior citizens who are drawing up their last will and setting up trusts with an attorney. These individuals include parents of young kids, medical professionals in the frontlines, and the most vulnerable among us. The idea of preparing and securing your final instructions in light of so much uncertainty is driving the surge, and this is true even for those who do not have a lot of assets. In this post you’ll learn what wills and trusts are, and why you need an estate planning attorney for such important documents.
The Difference Between Wills and Trusts
Wills and trusts are both methods of transferring an estate, but there are key differences. Wills take effect after your death and they lay out your final wishes for how to dispose of your property. On the other hand, a trust is effective as soon as you create it. With trusts you allow a third party to hold your assets on your behalf and specify how and when your assets pass to your beneficiaries.
Wills can be subject to probate, which is a publicly-recorded process to verify the validity and authenticity of a will. Probate also refers to the general administration of a person’s estate without a will. Trusts are not subject to probate court while wills are. The time it takes to probate an estate will depend on factors such as the complexity of the estate. But whether or not there is a will, probating an estate will cost you significant time and money.
Trusts, also known as living trusts, require active management and they can be revocable or irrevocable. In revocable trusts, you (the settlor) can designate yourself as the trustee to control assets within your trust and you have freedom to change the trust rules. With irrevocable trusts, you waive certain rights to control assets and the third party (trustee) would legally own the estate. One advantage to irrevocable trusts is the reduced estate tax, but note that you’ll have little to no ability to amend your trust rules.
Other Legal Documents to Consider
There are also other legal documents to consider during this time. These include healthcare proxies, which allow you to choose end-of-life treatment for yourself. You assign an agent to make medical decisions on your behalf in case you are unable to do so. Another document is the financial power of attorney (FPOA), which is similar to health care proxies but applies to financial affairs. With FPOA, you designate someone to manage your finances if you become incapacitated. Both of these documents fall under the general term “durable powers of attorney.”
Do I need a Wills and Trusts Attorney to Draft These Documents?
When it comes to managing your assets, now is not the time to DIY. Save yourself and your loved ones a lot of money and legal hassle by hiring a professional. Regardless of the method you choose for handling your assets, you should seek advice from legal, tax, and financial professionals. A boutique law firm like Hoffman & Forde gives you access to all of these relevant practices needed to draft your documents according to your unique needs.
Our experienced Southern California estate planning attorneys will help you on the best estate plan for you and your family. Each plan must meet state guidelines and we fully understand how these can impact your documents. With the world constantly changing and with so much uncertainty, prepare now and invest in legal advice to set up your family for the future. We’ll ensure your wishes are carried out the way you want them to and get peace of mind. Call us today for a consultation.