The process of developing a Will may be a sharp reminder of your mortality, but it can also be a welcomed assurance that your assets will be taken care of for your loved ones. Before we learn about five things to keep in mind as you put together a Will, let’s go over some common terms of the process:
Estate planning is the process of managing one’s assets and determining how those assets will be distributed after one’s death. Collectively, a person’s assets make up his or her estate. A Will is a legal document that allocates the distribution of assets after death, and a Trust is an agreement that allows a third party to retain assets on behalf of a designated beneficiary that can be allocated at any point after its creation.
Now that we have some of the basic terminologies down, let’s take a look at five things you need to know as you create a Will.
This will help make sure that your assets (real estate property, mutual funds, stocks, bank accounts, etc.) will be divided according to your wishes. Without an estate plan in place, it will be up to the state to divide your assets in accordance with state laws. Having an estate plan in place can give reassurance that your wishes will be carried out and that your loved ones won’t have to deal with the burden of organizing your affairs in the event of your death.
According to Elder Law Answers, a Will becomes effective after death, while a Trust can be used as soon as it is created. A Will not only addresses what will become of your assets, it can be used to designate property to loved ones and name guardians to children and pets. A Living Will, more commonly called a Health Care Directive, is a document that dictates your desires for end-of-life medical care. A Will is also subject to probate, a process in which a court oversees the management and validity of your Will.
Often, Wills are easier and typically less expensive to create. A Trust, however, can be used to manage assets if you become incapacitated and control the distribution of assets that a beneficiary can receive at a given time. A Trust typically does not need a probate. Being more expensive than the construction of a Will, you will have to pay for a Trust to be written, any management fees that occur, and for the transfer of property.
While there’s no proper age at which to create a Will, consider creating a Will in the event of significant life changes, such as marriage, having children, creating a business, buying a home, or in the event of a significant change in your health. Once you have a plan in place, it will be up to you to appoint an executor–someone who will carry out the details of your Will. An executor will also pay taxes, repay creditors, and carry out the disbursement of your assets. Having a Will in place can allow you the time to properly inform and discuss the details of your wishes with your loved ones.
Changes, such as updated state laws regarding estates, the birth of a new child, changes in health, and changes in personal relationships and priorities may affect how you want to distribute your estate. As long as you are not mentally incapacitated, you can edit, update, or even revoke your Will to fit with your wishes.
Our trusted attorneys at Smith, Paulson, O’Donnell & Erickson can provide guidance, inform you of the law for governing Wills in the state of Minnesota, and help you fine-tune the details of your wishes.
Visit us at Smith, Paulson, O’Donnell & Erickson for more information on Wills and Trusts.