15 Oct Living will and trust are a major first step in estate planning
When it comes to estate planning, establishing a living will and trust are important first steps. While many believe you have to do this later in life, it is a good idea to establish these items in the early stages. Couple who are newly married or in their 30’s are prime candidates to start looking at options and understanding Tennessee laws.
What’s the difference between a living will and a trust
You may be surprised to know that you have an estate. Almost everyone does. It’s made up of everything you own from your house and car to bank accounts and insurance policies. And you can’t take it with you when you die.
That means you need a plan for your estate. If you don’t have a plan, the state of Tennessee does. And your relatives probably won’t like what the state has in mind or how long it takes.
Where to start?
It’s best to start with a will or living trust. A will is simply a legal document detailing how you want your property and affairs handled after death.
Without a will, your estate goes through the probate process, which tends to take a lot longer to resolve. Generally, it’s best to have a valid will in place before you die. Tennessee law only has a few requirements to be valid. They must be for individuals 18 years old and of sound mind with two or more witnesses. The state also accepts oral wills under certain conditions, and handwritten wills also are valid.
But mostly, they must be filed in the county in which you live to be considered valid. If you want to avoid probate altogether, you should consider setting up a revocable living trust.
Setting up a Living Trust
A living trust allows the use of your assets while transferring the ownership of them to the trust, which is managed by a trustee. It doesn’t die with you. Instead, it passes ownership of your assets to the beneficiaries of your choice.
A living trust is more expensive than a will on the front end, but it can save money in the long term by reducing estate taxes and probate fee as well as protect your assets from creditors, spouses, and irresponsible spending.
One word: Probate
When a person dies without a will, the estate is required by law to enter probate, which is governed by probate court. Most probate cases in Tennessee will cost around $500, not counting additional attorney and accountant fees. Also, it takes around six months on average but can last years.
During probate, a judge will distribute your assets according to state law, not according to your wishes. And if you have children, the court can assign a guardian. The courts, not your family, controls the process. A living trust avoids this process almost entirely.
For questions regarding estate planning, contact the Law Office of Michael Craig and we’ll be glad to assist you.