Wills and Trusts
What Are The Differences Among A Will, A Trust And A Living Will?
Some of the basic documents that every person needs include a will, a trust, and a living will. When you decide to create these documents might vary with your age, family
status, and health status, but you will need them.
Let's make sure we understand what they are and what they do.
A will is a legal document that sets up a plan for when you are dead, where your assets should go, who should care for your minor children, and where you should be buried.
A living trust is a legal document designed to plan to what happens when you don't die. It includes plans for your care if you should become unable to make decisions on your own and which decisions will be made for you. The living trust also continues with a plan for when you do die. You should also have a will for items that are not covered by your trust.
A living will is actually a legal health care document that is often called an advanced medical care directive. It says who will make decisions about your medical care when you can't make them yourself. For example, do you want to be kept alive with machines or not? What kind of medicines or treatments will you accept or won't accept? Perhaps you are opposed to receiving a blood transfusion.
Frequently Asked Questions
Lucky you if you have an "Ozzie and Harriet life" with a stable family, one house that you live in, and a lifelong career with one employer. With an Ozzie and Harriet life there are few surprises and few changes that we have to adapt to. But we might now have an Ozzie and Harriet life. We might have more than one marriage, we might have blended families with children from more than one marriage, we might have kids who left the family because of drugs and crimes or sadly passed away. We might change jobs, change homes, acquire second homes, and we might even win the lottery.
When you have changes in your life, you need to be sure that your plans for the future, including your legal documents that are supposed to guide your future, are updated and reflect those changes.
Getting divorced? If you fail to change certain documents your soon to be ex-spouse might remain your heir unless you change your will and trust. Your ex-spouse might even still have the power to decide your future medical care unless you remove this authority from your living will or advanced health care directive.
Elder Law Attorney Martha Patterson reminds us that these documents including a will and trust are not automatically updated. You must update them yourself and crossing out a name and entering a new name on a legal document isn't considered to be a valid update. You must create a new will or a new trust.
Updates must be made when you get a diagnosis of a serious health condition and when you get married or divorced or welcome children into your family or if a spouse dies. Sometimes the laws change -- and that might require a change also. Really, you don't want an ex-spouse telling your doctors what kind of medical care you want when you're incapacitated.
You've probably seen the advertisements in your mail, in newspapers and on TV about how you can get a simple will for a low price like $49. But is a simple will all that you need? And will $49 get you the type of legal document that will really take care of your needs and protect your heirs and your estate? What can you expect to be in the simple will and when do I need something more comprehensive? Elder law attorney Martha Patterson says a will can be very simple if you only need to tell your loved ones what should happen when you die and who should be the guardian of your children and where you should be buried. A simple will can be written yourself but be sure it is properly dated and signed and witnessed. But as your assets grow and as your family grows, you may need more than a will.
We've all heard the term -- the executor. Basically it's someone who handles the terms of your will. But the duties of the executor are far from basic. The executor's job can be complicated and it's so complicated the law allows for an executor to bow out and can be replaced. There are lots of questions about an executor and elder law attorney Martha Patterson has some information about the executor and how the executor fits into your planning in your will.
An executor is simply the person who after you die takes over your affairs. Your executor will get a court fee for their work. Sometimes to avoid conflicts, you will choose an executor who will not be an heir. To change your executor, you have to update your will. Simply crossing out one name and entering another will cause problems with the court and these problems can be expensive.
Your executor may have a big job ahead after you die taking an inventory of your assets, getting an appraisal, paying bills and so forth. Choose your executor carefully and be sure you choose someone who recognizes the responsibility ahead of them.
Chances are you are less familiar with a trust than with a will. Elder law attorney Martha Patterson summarized some of the key things you need to know about trusts and how they operate.
The person who will run your trust is called the trustee and a trustee is like an executor with many responsibilities. But unlike an executor who goes to work only after your die, a trustee can act on your behalf and make decisions for you while you're still alive.
You want to be sure you choose someone you trust as your trustee. "Trust" is a key part of the word trustee, attorney Martha Patterson says. Trustees can make decisions about your money and your health care and your living situation so you must choose that trustee carefully. And if you want to make a change, you'll have to rewrite your trust. Don't mess around with this. Yes, you can literally live to regret your decision with a bad choice of a trustee.
Trustees can get paid for their work and service but they don't have to be, Martha Patterson says. You might set up something in your trust to award the trustee reimbursements for their expenses. You might give them property or money in your trust after you die.
When I was in college my rich Uncle died. My parents were certain he left everything to me and my siblings because he was estranged from his own sisters. But his will could not be found. As a result -- his estranged sisters got it all and me and my siblings got zero, zip, zilch, nada or as my parents said -- bupkas.
Under the law, a lost will does not exist. So, let's go over the best advice for knowing the whereabouts of wills, trusts and other legal documents. Elder law attorney Martha Patterson offers some advice.
She says that "everybody should have copies of everything" so everyone in your family knows everything and there are no surprises and no family fights. Wills and trusts should be kept in a fireproof safe in your home because you may not have access to a bank safety deposit box. Yes, a lot of people believe a bank safety deposit box is the best place to keep certain documents, but that is not always the case. Banks are closed on Sundays and holidays when you might need immediate access to certain documents. Also, keys to safe deposit boxes can be lost, and sometimes the location of the bank safe deposit box can be forgotten or in a distant city.
Too often it happens: a relative or close friend passes without a will. What happens then? Elder law attorney Martha Patterson says California has some specific rules for what happens when there isn't a will. The rules may be different in other states so check with your legal professional.
Generally, if there is no will State law will have a plan for you. Generally, that plan says your estate will go, in some particular order, to your children, parents and siblings. It can be a difficult and lengthy and expensive process to settle your estate if there is no will -- especially if family members challenge the State.
What happens when a will is lost? Well, the law might consider a lost will as "no will" and elder law attorney Martha Patterson comments on things you need to know.
Indeed, a lost will is no will and "it's like it didn't exist," says Martha Patterson. What if the original signed will is lost but someone has a copy? "If there is a copy maybe we can get the court to accept it," she says.
The best advice is don't lose the will. Keep the original signed and witnessed and dated will in a fireproof safe in your home. Keeping it in a bank safe deposit box can be a problem if you need the document on a Sunday or holiday when the bank is closed or if you lost the keys, or forgot which bank the safe deposit box is in.
In some cases, it is possible to have two fully executed copies of the will as a backstop. Ask your legal professional about this option.
Probate is another of those legal terms we hear frequently when the subject of a will comes up but few of us really know what is involved with Probate and Probate Court and how long Probate takes and how much Probate costs and how much aggravation Probate can add to the process of settling the estate of a loved one, relative or friend.
Elder law attorney Martha Patterson knows all about Probate and frequently she says she is called upon to go to Probate court to clear up matters that could have been prevented with proper planning. Here's what she tells her clients about dealing with Probate and possibly being able to avoid Probate.
Probate is a formal court process to administer an estate, she advises. The troubling fact is that it takes on average 18 months to complete the Probate process. It's a difficult procedure because the court has strict requirements such as the court will require an executor to appraise and inventory all property all property in the estate. Then, all expenses are paid, bills are paid, and creditors can make claims against the estate. These claims -- bills -- will have to be paid. And once all bills and claims are paid you ask for the Probate Court to distribute the estate.
"It's a lot of accounting and time spent, and I see attorneys getting paid a lot of money," says Martha Patterson, "when plans are not made to avoid Probate."