Insurance For Trusts And Wills
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|Trusts and Wills|
|The Difference between a Will And A Trust|
|What happens at Probate Time?|
|What kind of property avoids Probate?|
|Could property held in a “living” Trust be the defense?|
What role does life insurance play? Life insurance can create an estate when there are little or no other assets in your estate. In doing so it creates immediate cash to the named beneficiary.
Life insurance policies payable to a named beneficiary are exempt from probate also in most cases; proceeds of said property are exempt from state and federal income and inheritance taxes. However a life insurance policy that is payable to your estate is subject to probate and all taxes
A properly drawn Will is a legal document, which allows you to distribute your property to those you choose. It also allows you to designate beneficiaries to receive specific items of your estate and to nominate a guardian for the property of any minor children. There is also the issue of guardianship of your child’s person. However a parent by Will or Trust, has no definite right to absolutely name a guardian of the child’s “person”. These documents will serve as an indication of your wishes in court.
A Will, Trust and Life Insurance are the first line of defense when seeking to preserve your life’s work from life’s unexpected events. If you do not make your decisions for your heirs now the courts will make them for you later.
Dying without a Will is dying in testate, because
there is no Will or Trust the courts will control and
distribute your property to your heirs according to
the laws of the state in which you reside. In essence
the laws of your state will write a Will for you.
There is also the issue of probate to consider. What is probate?
All states have a court called probate in all jurisdictions. This court exists to address the administration and distribution of estates. All fees and expenses of your estate must be paid before your assets can be distributed. Such distribution of your property may bear no resemblance to what you would have chosen had you elected to document your wishes in a Will. In addition out-of-state property requires probate proceedings to be held in the state of the property in question.
While a Will comes into play when you die, a Trust can benefit you while you are living. A living Trust for example, is a trust established during your lifetime. It can be revocable, allowing you to make changes. In addition you can transfer substantially all your property into a living trust during your lifetime. Any omitted assets can be transferred into the trust at the time of your death through the use of “Pour-over Will. You should always make a “Pour-over”-Will at the time you establish a Trust. There are many other types of Trusts arrangements available for your consideration.
Wills and Trusts are devices you can use to provide for the distribution of your estate upon your death. Which one best fits your needs depends on your circumstances.
A living Trust is a popular alternative to the traditional Will. However you need to weigh the advantages and disadvantages of each before making your decision. Legal advice is a must in all cases!
The executor, ( the person you designated to carry out your wishes), presents your Will/Trust to the probate court an inventory of the assets and liabilities of your estate. The court will then determine that the documents are legal and accept them for probate. The court will order legal notice to any creditors and interested parties. Should there be any the court will hear claims from these parties and rule on them. All expenses must be paid before distribution can occur.
There are three types of property that may pass directly to your heirs without going through probate. Life insurance payable to a named beneficiary, property that is jointly owned with right of ownership, and property held in a “living”trust.
The “Living” Trust creates a financial bridge from one generation to another. When you set up a living trust, created while you are living, as opposed to being the instrument of a will, because you certified the trust as genuine while you are living there is no need for a probate judge or other person to check to determine whether it is genuine.