Legal Document Wills and Trusts
A living will is a document that sets out your wishes for medical and end-of-life care in case you can`t make those decisions yourself. You can specify exactly what you want or don`t want – for example, fans and power sensors. A tutorship is a legal relationship that delegates responsibility for the protected person`s personal affairs to one or more persons or organizations. Trusts are relatively inexpensive to create. A person called a “trustee” is named in the document to control the distribution of assets according to the wishes of the settlor in accordance with the escrow document and its mandates. It is also an effective way to control the passage of your estate beyond the grave. This document is sometimes called a living will. In some states, you can include the person you choose to make the decisions for you if that`s not possible. In other states, there is a separate document for this, called the Power of Attorney for Health Care. A will is a legal document used to control the division of property and, if necessary, to appoint guardians for children. A lawyer writes your will and you can work with them to update it as often as necessary to make sure it is still applicable to your current situation. A living trust creates a separate legal entity, and the assets of the trust bypass the probate process, so that these assets are technically no longer part of the settlor`s estate. Since living trusts are more complex to set up, a probate lawyer is usually involved, which also supports the validity of the trust.
If you become unable to work and don`t have a living will or permanent power of attorney for financial and health care policies, the family can become emotionally frustrated if they don`t know the dying family member`s death wishes. Discussing this issue and creating a legal document before an unexpected situation arises can be very beneficial for any family. Death is not an easy topic to talk about, but the actual death of a loved one can be very stressful for family members left behind. Preparing a document such as a living will or continuing power of attorney can make the grieving process much easier. Creditors can make claims against both wills and living trusts. In the case of revocable living trusts, the settlor is still considered the owner of the trust`s assets, although a separate entity is incorporated, as the trust can be amended at any time. Although it is often more difficult to make claims against a living trust than against a will, only an irrevocable trust can protect assets from creditor claims. Irrevocable trust. A trust that cannot be amended and that removes assets from the taxable estate.
There are different types of irrevocable trusts that are used to avoid the burden of estate tax, such as the settlor`s annuity trust or annuity trust or GRAT; Limited Access Spousal Trust or Spousal TLE; or Qualified Personal Residence Trust or TRPQ. For example, the value of a second home would trigger inheritance tax, so put the house in a TPRQ. You can still live in the house without paying rent for a while, and then the house goes directly to your heirs. In the case of trusts, the settlor has greater control and may set certain rules or conditions for the distribution of property. For example, if parents want their children to inherit income only at certain times or to care for a child with special needs, these wishes can be fulfilled through a trust. The constitution of a trust forms a separate legal entity and a trust relationship, whereby the creator of the trust, called a settlor, can hold assets for his own benefit or for a third party, the beneficiary. The settlor may choose a successor trustee to administer the trust if the settlor is unable to do so or dies. A trust is a legal agreement that takes effect as soon as you draw it up, as opposed to a will, which only takes effect upon the testator`s death. The trust distributes the property at a point determined by the settlor. Probate is the legal process that distributes the estate of a deceased person in accordance with their will and/or state law. While wills and trusts are estate planning vehicles to help you manage your affairs, there are important differences to understand before deciding whether one or both are best for your situation. Power of attorney only applies to the specific types of questions and transactions that you authorize in the document.
A financial power of attorney does not confer the authority to make medical decisions on your behalf. It is only effective during your lifetime, so it is no longer active after your death. Making sure you have these important estate planning documents can prepare you and your family for the future. Your executor would still be responsible for sorting out the estate, which can take anywhere from six to 18 months, depending on the subtleties. Imagine your oldest child spending the next year and a half going back and forth to court hearings when they mourn your death. It doesn`t sound funny, but it`s a possibility if you haven`t left a clear and well-drawn will and/or trusted documents. Trusts are flexible arrangements (but do not have to be flexible) that can be easily tailored to the needs of the settlor and beneficiaries. Unlike wills, trusts avoid probate courts: they do not become public and the family maintains a deeper level of confidentiality.
Wills and trusts are two ways to transfer your assets, but the main difference between these two documents is the timing. A will does not take effect until after your death, while a trust takes effect immediately. Let`s review the basics of these two types of legal documents. What is a living trust? A living trust, also known as a revocable trust, is another way to own property. You create a living trust during your lifetime by signing a trust deed, which is a legal document that governs how the assets transferred to the trust will be managed, when and to whom the income and capital of the trust will be paid, and to whom the assets of the trust will be distributed upon your death. You are referred to as the trustee, settlor or settlor of the trust, while the person to whom you transfer your property is called the trustee. People who receive income during their lifetime or who receive trust assets after your death are called beneficiaries. You can be a trustee, a trustee and a beneficiary at the same time. Ownership in the trust relationship is called a trust principal, corpus, or re.
As trustee, you can change the terms of the trust agreement or revoke the trust and repossess the trust property. What is a conservatory? Guardianship is similar to guardianship in that it is a legal relationship between a protected person and one or more persons appointed by the court to make decisions on behalf of the protected person, but curatorship is limited to the management of a protected person`s property and financial affairs. As with guardianship, guardianship can be full, limited, temporary or joint. Wills and trusts are legal instruments that ensure assets are passed on to heirs the way you want, helping to take care of the people and causes you care about. While each can be a pillar of estate planning, wills and trusts have important differences to consider when they come into effect, whether they can be challenged, or to what extent. Depending on your situation, you may only need one or the other, but some people use both to achieve different results. Note that you cannot determine guardianship of minor children in a trust, but only in a will. This is a common reason why some people use both wills and trusts together. Everyone has the right to make their own health decisions, but there may come a time when you or a family member is unable to make those decisions.
Continuing powers of attorney for health care and living wills can help plan ahead for these times. In the absence of these tools, South Dakota law allows others to make health care decisions for those who are unable to make theirs.
