The most common instruments used in estate planning are wills and trusts.

 

Wills – A will is a formal legal document that designates who is to receive your assets after you die. In the absence of a valid will, your estate is placed in probate when you die. This means that final decisions as to who will receive what from your estate are left in the hands of the Probate Court. This is a time-consuming, and often contentious process that is best avoided if at all possible.

 

When drafting a will, it is important that your wishes be expressed clearly and unambiguously to avoid conflict in the future. One of the most important considerations when drafting a will is the selection of an executor. The role of the executor is to ensure that all the terms of your will are executed faithfully and in a timely fashion. Many people opt to appoint a trusted and responsible relative or friend to serve as executor, but sometimes it may be best to appoint an objective third party, such as an attorney, to carry out the duties of the executor. It is also possible to appoint “co-executors” – for instance all of your adult children – but this option runs the risk of disagreement in the event of ambiguity, which could eventually land your estate in Probate Court despite the presence of a will.

 

Your will can allocate assets as precisely as you wish, but individuals often choose to designate specific percentages of the total value of the estate to individual heirs. For instance, if you have 3 children, you might opt to leave one-third to each child. In such cases, the executor can consult with the heirs to see if there are specific assets any of them want, then liquidate the remainder of the estate and distribute the proceeds on a percentage basis per the terms of the will.

 

Trusts – Trusts are an excellent tool for moving assets from one person to another. Trusts are used to set aside assets and distribute them at the time and in the manners specified in the Trust. Frequently, the terms of a will call for establishing one or more trusts, particularly when heirs include minor children. The Trust can be set up to hold assets until the child(ren) reach adulthood and then release the balance of the trust as a lump sum, or as a series of payouts over time. Prior to distribution, assets placed in Trusts are managed by a third-party administrator per guidelines outlined in the terms of the Trust or will.

 

Trusts can also be used to distribute assets when you are still alive – again, for example, to provide for a child’s education, or to provide income during early adulthood. When properly established, Trusts can afford significant tax benefits to everyone involved.

 

Federal and state laws governing trusts are dense and complex. Therefore, it is essential that you consult with an attorney and a licensed financial advisor when establishing a Trust. The partners at Liebmann Family Law have a combine 100+ years of experience and are well qualified to help you navigate the complicated rules surrounding Trusts.