Why Estate Planning Matters
Many people believe estate planning is something they only need when they grow older or if they become wealthy. The truth is, estate planning is appropriate for anyone, of any age, who wishes to have control over what happens to their property after they pass. Not only does it ensure your final wishes will be respected, but it gives peace of mind to you and your family. The Law Office of Michael Paul PLLC represents clients in all aspects of estate planning, including wills and trusts.
At the Law Office of Michael Paul, PLLC, our Will packages include the following four documents:
- Living Will
- Power of Attorney
- Healthcare Power of Attorney
A will is a legal document that, among other things, provides instructions for how to divide and distribute one’s property upon death. More specifically, a will serves such purposes as:
- Identifying beneficiaries (individuals and organizations who will receive your assets)
- Nominating executors (individual(s) to execute the terms of your will)
- Nominating guardians to care of your minor children
- Giving instructions about your burial, cremation, and/or memorial services
If you die without a will, any property you have that normally would be subject to a will passes through what are called intestate laws. These laws determine which of your relatives will get your assets when you die, and how much each will receive. If you have children under 18, a court will decide who takes care of them. Not having a will means you don’t have control over these and other matters, so what happens to your assets and children may not be ideal.
Yes, it can. Life changes, and major changes such as newly acquired property, marriage or divorce, and the birth of children can occur after you’ve executed a will. You can revoke and execute a new will as long as it follows all statutory requirements. Or, you can execute amendments – known as codicils – to the will, as long as they meet the same requirements. You cannot update a will simply by adding notes, crossing out sections or adding handwritten changes.
What is a trust?
When a person dies with a will, it must be submitted to a court process known as probate. This can take months to complete and involves probate fees. A trust operates in a similar manner to a will, but without probate. It is a legal instrument by which its author (the settlor) designates an individual (the trustee) to manage property for the benefit of a third party (the beneficiaries). The benefit of certain trusts is that the settlor and the trustee can be the same person. Besides avoiding probate and the fees and wait times that come with it, a trust:
- Has certain tax advantages;
- Provides flexibility to the settlor during his or her lifetime;
- Allows assets to be passed on to the next generation;
- Provides financial support to loved ones.
Your attorney may also suggest using a pour-over will. This is a last will and testament that, upon your death, gives any remaining property in your probate estate to your trust.
There are two main types of trusts: revocable and irrevocable. Revocable trusts can be amended or revoked. As long as the settlor can change or revoke the trust, it is revocable. A trust is irrevocable if it cannot be changed or revoked. If the settlor dies, a revocable trust becomes irrevocable. The terms of the trust itself may also make it irrevocable. Once assets are transferred into an irrevocable trust, the settlor cannot change the terms.
Other Types of Trusts
- Spendthrift Trusts
- Discretionary Trusts
- Support Trusts
- Special Needs Trusts
- Charitable Trusts
- Honorary Trusts (for pets)
The main advantage of a revocable trust is that the settlor can alter its terms and take property back out of the trust at any time. Revocable trusts do not have the same tax benefits as many irrevocable trusts. Any trust income received by the settlor is taxable, and trust assets are not protected from creditors.
An irrevocable trust permanently transfers assets into the trust. The primary disadvantage of this type of trust is the lack of flexibility and control over these assets. But there are several tax benefits to irrevocable trusts. For instance, many of them pay their own separate income taxes apart from the settlor. This type of trust can allow the settlor of the trust to move to a lower tax bracket. If structured correctly, the irrevocable trust also can shield certain assets from creditors.
Contact Us Today
Why leave your final wishes to chance? Executing a will and/or trust gives you a say in what happens after you die. At Michael Paul Law, we can meet with you to discuss the best strategies to address your estate planning needs.
Searching for an estate planning attorney in Raleigh, Wake Forest, Rolesville, Youngsville, Louisburg, Knightdale, or Zebulon? Contact us today to schedule a consultation.