Despite acknowledging the need to have an estate plan in place, more than half of all Americans have yet to start on their estate plan. One common explanation for this is that the average person finds the idea of creating an estate plan intimidating. While an estate plan can become extremely complex as both your family and your estate grow, a basic estate plan is not usually as complex and difficult to understand as people frequently envision it will be. For many people, the first question they want answered is “What is the most important estate planning document?” The Los Angeles estate planning attorneys at Schomer Law Group, APC discuss the two most important estate planning documents for most people.
Your Last Will and Testament
Unquestionably the most well-known of all estate planning documents, a Last Will and Testament is also the most important estate planning document in most initial estate plans; however, that may change as an estate plan grows to account for additional needs and goals. A Last Will and Testament is a legally binding testament, usually in writing, that allows you to make both general and/or specific gifts of assets from your estate to designated beneficiaries. Those gifts are legally required to be honored after your death. Your Will also allows you to make two additional important decisions. First, you will appoint someone to be the Executor of your estate in your Will. The Executor of your estate is responsible for overseeing the probate of your estate following your death. Second, you can nominate a Guardian for your minor children in your Will. Your Will, in fact, is the only official opportunity you have to tell a judge who you would want to take over the care of your children if a Guardian is needed. When someone dies without even a basic Will in place, the state’s intestate succession laws dictate how the estate assets are distributed, an outcome most people wish to avoid. Executing a Will ensures that your wishes will be honored instead of letting the state determine the fate of your estate.
Do You Need a Trust Agreement?
A Will works fine to distribute a relatively simple and modest estate; however, if you have minor children, complex assets, and/or distinctive estate planning goals, a Will may not be the best choice as a primary estate planning document. Instead, many people choose to create a trust. A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor (also referred to as a Maker or Grantor), who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. All trusts are first divided into one of two categories – testamentary or inter vivos – the latter of which is more commonly referred to as a living trust. A testamentary trust is a trust that arises upon the death of the Settlor, and which is typically activated by a provision in the Settlor’s Will. A Trust Agreement is the estate planning document used to create a trust. The Trust Agreement sets forth the primary trust purpose, appoints the Trustee, and contains the trust terms which dictate how the trust is to be administered. Although trusts can be used throughout an estate plan to achieve a wide range of goals, a trust may be considered the most important estate planning document if it is used as the primary vehicle by which estate assets are distributed. There are two common reasons why a trust is used as the primary vehicle for asset distribution within an estate plan – probate avoidance and protecting a minor child’s inheritance. As such, if you wish your estate to avoid the often lengthy and cumbersome probate process and/or if you are the parent of a minor child, a Trust Agreement may be your most important estate planning document.
Contact Los Angeles Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about estate planning, or you are ready to get started on your estate plan, contact the experienced Los Angeles estate planning attorneys at Schomer Law Group APCby calling (310) 337-7696 to schedule an appointment.