It’s a common misconception that you only need to set up a will and trust when you’re old or have a life-threatening sickness. The reality is that every legal adult must set up a will and trust to avoid complications and financial burdens after their death or incapacitation, especially since you cannot predict these events.
These two documents are everything you need to manage your assets and distribute them according to your preferences once you can no longer overlook them personally. So if you’re unsure when you should start creating your will and trust, the right time is now. Here is everything you need to know about why you must set up those two documents as soon as possible.
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Many crucial decisions about your assets and children are left to the court when you fail to leave a will and trust behind after your passing or incapacitation. For example, the court will appoint an executor for your will and a trustee for your trust, both of which oversee the distribution of your assets. Although an unbiased opinion may be beneficial, choosing your trustee is much more straightforward and inexpensive.
In addition, these two documents also detail your preferred guardian for your children. In case both you and your spouse pass away or become incapacitated. If you don’t set up will and trust, the court will appoint a guardian as they see fit.
Planning your own funeral may seem morbid, but it’s more practical than you think. Leaving comprehensive funeral instructions in your will can lessen the burden on your loved ones when you can no longer guide them. Of course, these instructions aren’t legally binding, but your loved ones will undoubtedly be happy to fulfill your wishes at your funeral.
You can also include the name of a funeral executor in these instructions if you know who you’d want to plan and complete your funeral. Other than that, suggestions for the service, location, and resting place will also be much appreciated by your family.
Depending on the terms of your trust and will, you and your family may be able to get tax benefits down the line. For example, if you have an irrevocable trust, you may be subject to transfer tax benefits because you’ve transferred your assets out of your estate. If the right conditions are met, the assets in your trust will not be subject to estate tax after your passing.
You can also send an annual exclusion to your irrevocable trust without paying additional gift tax at an exemption rate of up to $15,000 per person and $30,000 per married couple. Again, your trust administrator and an attorney can guide you about which type of trust to choose in your case.
As we mentioned, the lack of a will and trust leads to probate. This means the court will determine how to distribute your assets amongst family members and a guardian for your children if your spouse also passes away.
Of course, no one knows your family better than you, which is why leaving these decisions up to the court can lead to some unwanted family disputes. Setting up a will and trust is especially important for those with complicated family dynamics, otherwise leading to uneducated guesses about how you would want to distribute your estate.
Ensuring your assets are distributed to the right beneficiaries is one of the main things you worry about when you grow old. But, even then, we tend to put off creating a will and trust, even though these two documents can guarantee that our wishes are fulfilled after our passing.
When your assets are in probate, the court makes standard decisions about who will receive your estate and in what percentage. The obvious decision may be the deceased’s immediate family, but those may not be the wishes of everyone. By writing a will at the right time, you can detail exactly where you’d wish for your assets to go.
This also allows you to decide who doesn’t receive any inheritance. For example, one may want to exclude their ex-spouse from the list of standard beneficiaries. Finally, writing your will and trust guarantees that an executor or trustee of your choice distributes your assets exactly as you want. For example, some parents prefer that their children only receive their inheritance once they start college.
Of course, your car, home, and land aren’t the only assets to manage after your death or incapacitation. You’ll also need to determine who manages your digital assets, such as your social media accounts, digital files and property, email IDs, and more. Writing a will allows you to name a digital executor to manage, remove, or upkeep these assets.
You can leave them to a family member or name a professional digital executor, detailing other instructions on how you’d want your assets managed. For example, most people prefer their accounts closed after their death.
Creating your will also allows you to regularly support your favorite charitable cause after your death. Undoubtedly, everyone wants to leave a positive impact after their passing, and setting up your will and trust is the easiest way to do so. You can detail a certain percentage of your assets to be distributed to charitable organizations of your choice at the desired schedule (monthly, annually, bi-annually, etc.).
Peace of Mind:
Lastly, setting up a will and trust helps achieve overall peace of mind. One of the main reasons death may be intimidating is the fear that you’ll leave the world with things unsaid and tasks incomplete. A comprehensive will and trust will allow you to complete all matters after your death and ensure your family is free of financial burden during those tough times. Knowing your loved ones won’t need to go through probate and your assets are exactly where you want them, you’ll be able to enjoy peace of mind.
Life is undoubtedly unpredictable, but so is death. Setting up a will and trust isn’t just something senior citizens must do; it’s an excellent practice for any legal adult. If you want to ensure control over your assets, their distribution, and the potential guardianship of your children after your passing, today is the best time to start setting up your will and trust.