Want to show your loved ones how much you love them? What better way than by leaving them your most precious valuables when you're gone? If you want to leave your valuables with as much worth as they hold, then you need to know the differences between wills and trusts and how they actually perform.
Wills
A will is simply a piece of paper that says who gets what when you die. It is also a legal document, which is the problem. When you deal with a will, you have to deal with the courts. A will often takes a circuitous route to get where it's meant to go and can accumulate exspensive court costs as well.
How do you get a will? There are a few ways to go about it. You can have a lawyer draw up one, which'll cost about a few hundred dollars-depending on where you live and how complex your will will be. You can buy a form will from a stationary store and fill in the blanks, which will cost about $10. Or you can get a computer program that will draw one up for you for about $35. If you use any of these methods to draw up a will you will need to sign it, and while you're signing it, have two or three people sign it as well as witnesses to your signature. Some states require two signatures, some three, check with your state. If you want to change your will you draw up a codicil, which is an additional paper numbering your changes. Follow the same procedures as you did before.
Holographic Will
This is a will that you draw up yourself on a piece of paper and it will cost you nothing. Just make sure that the paper you use has no other writing on it or the will will not be considered legal. Make sure the entire will is written in your handwriting and is dated and signed by you. If you make a mistake, start over, anything crossed out will make the will null and void. Do not have anyone else witness a holographic will, because this, too, will make it null and void.
After your death your will has to go through the court system. Usually the executor has a lawyer handle this. Once the will gets to court, two things happen. First, a judge has to authenticate the will, to make sure it is valid. This process is called probate. After the judge probates the will, he or she will then sign a court order transferring title to the property covered in the will to the people who are intended to receive it. This process can take anywhere from six months to two years or more, while property remains in linbo. This process, depending on the state, can also be very costly. There are fees called statutory probate fees-fees, set by law, that have to be paid by any estate. If your estate is very small, less than $60,000 to $100,000, you might be able to avoid probate with a probate affidavit. These forms can be in most banks at no cost.
Wills may also be contested, which means that anyone who thinks he or she should have something in the will that the deceased has left to someone else has the right to come to court and ask for it. Then the judge has to decide. This also stands true for guardianship of children. It rests in the hands of the court. The courts will make its decisions based on whatever it feels in the best interest of the children.
Trusts
Revocable Living Trusts-A set of documents stating who controls your assets while you are alive and what will happen to them when you are gone. The property is held in the name of the trust-for you, while you are alive, and for your beneficiaries, after you are gone. When you die the trust passes your property directly to the people you want to have it. Anytime you want to, you can amend the trust, in case you change your mind about who gets what. There is no probate. The courts are not involved in the transfer of your estate. It is called a trust because you are trusting someone to take care of your assets for you and to carry out your wishes when you can no longer do so yourself.
How do I set up a Revocable Living Trust?-There are books in your bookstore that you can purchase, that will show you how. Computer programs for setting up trusts are also available. To be on the safe side have a qualified attorney look it over to make sure it is done correctly. Attorneys can also draw up a trust.
Funding Your Trust
Computer programs and books about trusts provide sample letters to show you how to fund your trust. If you have a lawyer draw up your trust, he or she will have form letters available to show you.
Providing for Your Children with a Trust
Important decisions of who, how, when and for what purposes your children will receive the money you are leaving them, is made by you. No yearly reporting, no fees.
If love and value are what you are aiming for by leaving behind your assets, then hopefully now you will be able to choose the method for leaving them. However, If you decide to go with a trust, Suze Orman, certified financial planner and best selling author of The 9 steps To Financial Freedom, New York: Crown Publishers 1997, says "You should also have a will as backup to cover any assets you have not put into your trust-things such as furniture, personal items, and items of strictly sentimental value."
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