When it comes to preparing one’s estate plan, the options and information can be overwhelming. It seems that the internet can be a wealth of misinformation. Between online estate planning and document preparation services and financial advisers, it is easy to get confused about the differences between various estate planning options. Nothing you find online can substitute for consulting with an experienced Birmingham estate planning attorney.
Last Will and Testament
Think of a will as your final statement of wishes. It can be a simple document or a complex set of instructions. Wills are, of course, limited. A will simply tells people what you want done with your possessions and money upon death. It can do very little to control how others act after your death.
What a Will CAN do:
- Let your heirs know who you want to receive your possessions upon death
- Let your heirs know who you want to be in charge of distributing your possessions and paying your debts upon death
- Explain whether you want your executor to pay a bond or not
- Tell people your wishes about heirlooms and bank accounts
What a Will CANNOT do:
- Tell heirs what to do with possessions and money once received
- Control the conduct of others
- Tell others what to do during your life, such as what to do if you become mentally incapacitated
- Force others to act as executors against their wishes
- Give authority regarding healthcare decisions during life
Revocable and Irrevocable Trusts
The Alabama Trust Code provides a complex set of rules for setting up a trust. After all, trusts offer a much wider set of options in estate planning. It may help to think of a trust as a candy dish. You create this dish and decide what goes in it. Then you assign someone to hold that dish and distribute the candy as instructed.
In this analogy, the dish is the trust. The person holding the dish is called a trustee. That person is granted the authority to distribute funds and property as instructed in the trust document. The people who receive things from the trust are called beneficiaries. Because of the way a trust is established, you can make the trust as complex or simple as you desire, but the goal is to create a clear set of instructions for the trustee to follow so long as assets exist.
Revocable vs. Irrevocable
When you establish a trust, you are called a settlor or trustor. One type of trust can be revoked by the settlor and one cannot. There are many specific reasons for choosing one type over another. Traditionally, unless mental competence is expected to be an issue, most people choose a revocable trust, which means they can revoke or amend their trust during life.
However, there are certain situations in which setting up a trust that cannot be revoked may be preferable. This is something you should discuss with an attorney before making a choice, as there are often public benefits, social security, healthcare, and tax implications that must be considered.
What About Land Trusts?
A land trust is generally used as an alternative way to hold property. It has a few benefits. For instance, a land trust can create a certain degree of anonymity to ownership. However, buyer beware. Even with a land trust, people can still discover ownership if they want to, and they do not generally provide any asset preservation protections. Some have criticized land trusts as somewhat of a scam. In truth, they are just like any other tool in the estate planning attorney’s tool box. Used wisely, they can be useful. They just are not for everything.
Land trusts are usually set up a at trust company or bank, and an annual fee is charged to hold the property in trust. These can be expensive and unnecessary, depending on your intentions.
Contact an Attorney to Discuss Your Plan
Whether you are looking for a way to protect your assets and maintain eligibility for public benefits or trying to preserve wealth for future generations, the experienced attorneys of Five Points Law Group are ready to help you get started today.