A will is the traditional document that would determine who and under what circumstances beneficiaries are to receive assets of a decedent. The typical simple will would provide that if a husband died the assets would go to his wife if his wife was living and if his wife was not living, the assets would go to their children. If, however, any of the children are minors (under the age of 18) there would be a requirement to establish a contingent trust. A contingent trust is a provision in the will that would essentially recite, if any of the children or one of the children is under the age of 18 (or some other age that you can select), the property would be held in trust by a person you select for the benefit of that child. When that child obtains the age that you have selected, the money would be distributed to them. In the meantime any money in the trust would be used for the education, housing, clothing, food, etc. The will also would name a guardian for the minor children. The guardian is the person with whom the child resides while he is a minor. The will would name an executor. The executor is the person who administers the will through probate and distributes the money to the trustee or the beneficiaries.
To summarize, a will would require the naming of an executor who would administer the estate through probate. It would require the naming of guardian who would be the person with whom the minor children would reside and would require the naming of a trustee. A trustee is an individual who would manage the funds on behalf of the children until they attain the age the decedent has chosen for distribution. The same person can act in all three capacities.
Probate of an estate is required because the decedent died owning property in an excess value of $100,000 in the decedent’s name. Typically with a married couple who owns property in joint tenancy, no probate of the first to die is required because there is a successor owner. Joint tenancy is not the solution to avoid probate. To avoid probate, you really need to have a living trust.
In a living trust, we have eliminated the need for a financial institution to act as trustee. In a living trust, you as the donor can also be the trustee and can also be the beneficiary. This is a way you can keep all of the assets under your control. The only thing that is changed is the name that the asset is registered under. For example, instead of owning a home in your name the home would now be owned by your trust. When you die, you did not own property in your name, so there is no probate. The trust agreement would provide that upon your death the assets would be delivered to the beneficiaries you have named. For example, in a simple trust agreement, you as the donor would agree and enter into an agreement with you as the trustee that the donor would convey assets to the trust. You as the trustee would then manage the assets, the same way you are acting now as an individual, except the property is now owned by your trust not by you individually. The trust agreement would provide for a successor trustee. This person would be the equivalent of an executor in a will. The successor trustee would then distribute the assets in accordance with the terms of the trust when you pass away. For example, if you have minor children the successor trustee would simply continue to administer the assets since they are already in a trust for the benefit of the minors until they reach the prescribed age you have selected. If they were all adults, the trustee would distribute the assets in accordance with the terms of the trust. The net result of a living trust is that you have the same pattern of distribution that you would under a will without the added expense of probate.
Notice that in the explanation of a trust agreement, I have said nothing about the guardian if you have minor children. That is because trusts do not deal with guardians. When we prepare a living trust we also prepare a pourover will. This is a very simple will. It says if there is anything in my personal name that I have not transferred to the trust, I want those assets to go to the trust (since the trust is the document that distributes the assets and not the will). If you have minor children, the will would name the guardian the same as in any other will. A living trust really consists of two documents: the living trust agreement and the pourover will.
In preparation for your first appointment, please complete the client information sheet and bring it with you to our office at the time of your first visit.I hope this has been helpful to you. If you have any further questions, please do not hesitate to contact our office.