Everyone probably has a basic understanding of what wills and trusts are, but the legal subtleties of these documents can be a little confusing. In order to make sure that you’re protecting your assets, or the assets of a loved one, properly, it’s a good idea to understand exactly what the differences are and what the pros and cons of each can be. In this blog, we will go over the basics so you can start considering your options. When you’re ready to create a will and/or trust, or you need to modify an existing will, please call us at Safe Harbor Wills and Trusts in Watertown. Our law firm specializes in helping you keep your money safe, especially after a death or being moved into a nursing home.
What is a Will?
Unlike the wills you see on TV, a will is a legal document that directs who will receive your property after you die and shouldn’t be used to make people jump through weird hoops to receive what you have left them. Creating unreasonable conditions in a will can lead to it being challenged in court. However, a will can contain information about who you want to raise your minor children as well as any specific funeral arrangements you would like. A will allows you to name beneficiaries for all of your individually held assets (basically anything that is owned solely by you).
While a good will is a document that will clearly lay out how you want your assets distributed following your death, it does need to go through probate before some assets can be given to beneficiaries. For example, in order for bank account balances and life insurance policies to be given to beneficiaries, a probate court has to declare that a will is valid. If the will is clear, this usually isn’t a problem, but it isn’t rock solid. It is sometimes possible for one party or another to contest the will.
Another area where a will can fall short is in dealing with assets if the person has not died. A will does not allow for a person to make stipulations about what to do with their money if they face a medical problem that prevents them from communicating or if they are deemed mentally unfit.
A will also becomes a part of the public record when they are submitted for probate, which has been known to cause some problems.
How Are the Assets of a Will Distributed?
After a person dies, their executor — a person named in the will who will ensure that the will is followed — will begin the probate process and then pay off any debts that the deceased has from the assets of the will. After all debts are paid, the executor will distribute the remaining property as stipulated in the will. The executor also wraps up any other loose ends that the deceased had, including cancelling credit cards and notifying creditors and the Social Security Administration.
In addition to all of these responsibilities, if there are ongoing payments that need to be made (mortgages, etc.), the executor will set up a bank account using the funds from the estate and make the necessary payments from that account.
As you can see, it can take a lot of work and a lot of time before a person’s assets are available to be distributed. This is one of the primary problems with a will, and it is one of the strengths of a trust.
We will cover trusts in the next blog entry, so be sure to check back soon. If you know that you need to protect your assets, or the assets of an elderly loved one, contact Safe Harbor Wills and Trusts today. We will work as hard as possible to ensure that your money goes where you want it to go.