Hey folks! Dale Davidson here from Davidson Law Offices and I’m glad you visited our blog today! I want to dive deeper into estate planning and discuss the last will and testament, an estate planning document that’s crucial for everyone, regardless of their financial status. It’s a common misconception that estate planning is only for the wealthy. But the truth is, if you have any assets—a house, a car, a bank account—you need an estate plan. It’s about making sure your affairs are in order if something happens to you unexpectedly.
Let’s break down the basics of an estate plan, which typically includes a durable power of attorney, an advanced healthcare directive, and a last will and testament. While I’ve discussed durable powers of attorney and advanced directives in previous videos, today I’ll focus on the last will and testament. Understanding what a will is and when you might need a trust is vital.
What’s a Last Will and Testament?
A last will and testament is essentially your instructions put on paper, signed and executed according to your state’s laws. It outlines who gets your belongings when you pass away, who will manage your estate, and how your assets will be distributed—whether outright or in trust. Many people assume that being married means their spouse will automatically inherit everything, but that’s not always the case. For example, in Georgia, if you die without a will and leave behind a spouse and children, your spouse gets one-third of your estate, and your children split the remaining two-thirds. If your children are minors, this can create complications.
Creating a last will and testament is straightforward. It needs to be in writing and executed with two witnesses and a notary, depending on your state’s requirements. A will ensures that your wishes are honored and prevents the state from deciding how your assets are distributed.
Types of Trusts
Now, let’s talk about trusts, which many people inquire about. Trusts come in different forms, the most common being revocable and irrevocable trusts. A revocable trust, also known as a living trust, allows you to maintain control over your assets during your lifetime. You can add or remove assets from the trust as you see fit. Upon your death, the trust becomes irrevocable, meaning its terms cannot be changed, and the assets are distributed according to your wishes without going through probate.
Here’s a simple way to understand a trust: think of it as a bucket. You place your property, stocks, bonds, and cash into this bucket. As long as the bucket is open (revocable), you can take things out and put things in. When you die, the bucket is sealed (irrevocable), and the assets are distributed per your instructions. This setup can help avoid probate, which can be a lengthy and costly process.
For example, if you become incapacitated and have a trust, the successor trustee can manage your assets without the need for a durable power of attorney. Banks sometimes have issues with durable powers of attorney, but trusts provide a smoother transition. Irrevocable trusts, on the other hand, are typically used for asset protection, shielding your assets from potential future creditors or nursing home costs.
We can also establish a trust within a will, known as a testamentary trust. This type of trust takes effect upon your death and can provide for your spouse or children, especially if they have special needs. It ensures that their benefits, such as Medicaid, are not disrupted.
In summary, everyone should have a last will and testament to ensure their assets are distributed according to their wishes. Trusts are an additional tool that can be beneficial depending on your circumstances. For instance, in states like Florida, where probate can be a hassle, a revocable trust might be a wise choice to avoid probate altogether. However, in states like Georgia, where probate is less burdensome, the necessity of a trust may vary.
To wrap things up, estate planning is about taking control of your future and ensuring your loved ones are taken care of. Whether you opt for a will, a trust, or both, it’s essential to have these documents in place. If you’re unsure about where to start or what’s best for your situation, don’t hesitate to seek professional advice.
If you need assistance with creating a last will and testament or other estate planning needs, complete this form or give us a call at (229) 226-8183. If you’d like to see this blog in video format, you can watch it below. Please be sure to SUBSCRIBE to our YouTube channel and click the bell notification button so that you’re notified each time we publish a new video.