A Last Will and Testament and a trust are fundamental parts of a thoughtfully prepared estate plan. Through these documents, you will specify how your property will be transferred. Work with a knowledgeable and experienced wills and trusts estate lawyer at the Vander Laan Law Firm, LLC to prepare your Last Will and Testament or trust as part of your comprehensive estate plan.
Your Last Will and Testament
Your Last Will and Testament, commonly referred to simply as a Will, is one of the foundational documents of any estate plan. A Will identifies broad categories of assets and explains how those assets will be transferred at the time of your death.
In your Will, you will name the executor of your estate. This is the person who will be responsible for handling your affairs after your death, and submitting your estate to probate.
You can also name a Guardian for any children you have who are under the age of 18.
Why Do You Need a Will?
Many people mistakenly believe that only wealthy people or people with complicated estates need a Will. But there are many reasons why everyone should have a Will.
- In your Will, you can be clear about who will receive your assets, and how much they will get.
- Your Will allows you to keep your property out of the hands of people you do not want to receive your property, such as an estranged relative.
- You can identify who will have custody of your children and care for them. Without a Will, a court will make this important decision.
- A Will makes it easier for your relatives to access your assets.
- You can save money on taxes by making gifts to family, friends, and charitable organizations which can be used to reduce the amount you owe in estate taxes.
What Happens if You Die Without a Will?
If you die without a Will, you died intestate. Intestate is a fancy way of saying you died without a Will. When this happens, the laws of intestacy take over and specify how your property will be distributed at the time of your death. This includes bank accounts, retirement accounts, real estate, and any other property you own at the time of your death.
If you die in Nevada without a Will, your estate will be divided among your heirs according to the laws of intestate succession. Generally, this means that your property will pass to your spouse, if you have one. If you died without a spouse or your spouse died before you, your property will be divided evenly among your children, if you have any. If you were unmarried and had no children, your assets will pass to your parents. If you have no surviving parents at the time of your death, your assets will be divided evenly among your siblings.
Having a Will allows you to specify how your estate will be divided. A Will also makes it easier for your family to access your assets, and saves you money on estate taxes.
What Is a Trust?
A Trust is similar to a Last Will and Testament in that it specifies how your property will be distributed. But a Trust offers more flexibility and can be used to address more complex estate planning situations.
A trust establishes a fiduciary relationship between the trust-maker (also known as the grantor, settlor, or trustor), and the trustee. The trustee holds the assets placed in the trust, and manages them for the benefit of a third party, known as the beneficiary. Oftentimes, the grantor, trustee, and beneficiary are the same person. Upon the grantor’s death or incapacity, a successor trustee manages the trust for the benefit of another beneficiary.
A trust protects the grantor’s assets, ensuring that they are handled and distributed according to the instructions of the grantor. A trust can also save time and money when transferring property, and provides the grantor with a more private way to transfer assets.
Unlike a Will, which must be approved by a probate court and is public record, assets transferred by trust remain private.
A trust can also be used to transfer assets before the grantor has died, while a Will only applies once the person who wrote the Will has died.
Different Types of Trusts
There are different types of trusts that are used to address different estate planning situations. However, most trusts fall into basic categories.
Living or Testamentary
A living trust, also known as an inter vivos trust, benefits the grantor during his or her lifetime. Assets are transferred to the trust, and the grantor and trustee, and beneficiary are often the same person. When the grantor dies, the assets are transferred to the designated beneficiaries.
A testamentary trust is created through a person’s Last Will and Testament. Assets are only transferred to the trust when the grantor dies.
Revocable or Irrevocable
A revocable trust can be changed by the grantor during his or her lifetime.
An irrevocable trust cannot be changed once it is established.
A living trust can be revocable or irrevocable. A testamentary trust can only be irrevocable.
Special Types of Trusts
Trusts can be used to address a wide variety of estate planning needs. Common types of trusts include:
- Qualified Terminable Interest Property Trust (QTIP). The grantor directs assets to specific beneficiaries at different times. For example, a grantor could make a gift to a spouse who will receive benefits for his or her lifetime, and the children will receive benefits after the surviving spouse dies.
- Spendthrift Trust. Assets placed in the trust cannot be reached by creditors. The trustee manages the beneficiary’s assets and can prevent the beneficiary from using trust assets except in certain circumstances, or until the beneficiary reaches a certain age.
- Special Needs Trust. A dependent who receives government assistance, such as Social Security benefits, remains eligible for those benefits but can still receive an inheritance through the trust.
- Medicaid Asset Protection Trust (MAPT). The trust allows a person to become and remain eligible for Medicaid while protecting and conserving assets if they are needed for long-term care.
- Credit Shelter Trust or Family Trust. Assets are placed in a trust in an amount up to the estate tax exemption. Remaining assets are passed to a spouse, tax-free.
- Generation Skipping Trust. The grantor transfers assets tax-free to their grandchildren.
- Insurance Trust. An irrevocable trust that places a life insurance policy inside a trust, removing it as a taxable asset.
- A-B Trust. A joint trust created by a married couple that divides assets in two on the death of the first spouse. Assets are transferred to a second beneficiary, who is anyone except the other spouse.
How Is a Will Different from a Trust?
Wills and trusts are both used to transfer assets. However, a Will only allows for the transfer of assets upon death. A trust can be used to manage and transfer assets while the grantor is still alive.
A trust transfers assets out of the grantor’s name, and can be used as an effective estate planning tool to minimize estate taxes.
Finally, assets placed in a trust are not transferred through probate. This allows the asset transfer to remain private, and the transfer will occur more quickly than assets passed through probate.
A Nevada Estate Lawyer Who Protects What Matters Most
Everyone can benefit from comprehensive estate planning. Whether you are retired and planning how to pass your estate to the people and organizations you care about, or are a young couple who needs a plan to protect and care for young children, estate planning offers peace of mind in knowing that you have made your wishes known regarding how your assets will be transferred. You also gain peace of mind knowing that you are helping your family avoid a time-consuming and expensive intestacy process, and creating your legacy for future generations.
From her offices in Minden and Carson City, Nevada, wills and trusts estate lawyer Natalia Vander Laan helps her clients achieve peace of mind through comprehensive estate planning.
Learn what sets the Vander Laan Law Firm apart from other attorneys in Carson Valley, get to know Natalia Vander Laan, and contact the Vander Laan Law Firm today to schedule a free consultation to discuss your estate planning needs.