Patrick Slouck’s Post

Transcript

Understanding the differences between a last will and testament versus a self-directed revocable trust In this video, we'll explore the key distinctions between a last will and testament and a self-directed revocable trust where the truster and the trustee are the same individuals retaining full powers. What is a last will and testament? A legal document outlining how a person's assets and properties are distributed after death. It only takes effect upon the individual's death and it must go through the probate process, which can be time consuming. And costly. The executor named in the will is responsible for carrying out the instructions outlined in the document. Provides less privacy since it becomes a public record once it's filed in probate court. Now let's discuss what is a self-directed revocable trust. A legal entity created during the thrusters lifetime to hold assets and properties. The truster who creates the trust can also act as the trustee, maintaining control over the assets and retaining the power to modify or revoke the trust at any time. Avoids probate, which means assets can be distributed to beneficiaries without court involvement, saving time and money. Offers more privacy since it doesn't become a matter of public record like a will filed in probate court. Allows for a smoother transition of assets in case of incapacity since the successor trustee can take over management without the need for court intervention. What are the key differences? Timing a will takes effect after death, while a trust can be effective during the trustee's lifetime and after death. Probate. Wills typically go through probate while trusts avoid it. Privacy. Trusts offer more privacy than wills as they do not become public records. Flexibility. Trusts provide more flexibility and control over asset management, especially when the trustor and trustee are the same person. In summary, while both the last will and Testament and a self-directed revocable trust serve to distribute assets, they differ significantly in terms of timing. Probate involvement. Privacy. And flexibility. Depending on individual circumstances and preferences, one may be more suitable than the other. It's essential to consult with legal and financial professionals to determine the best option for your specific needs and goals. What are the typical problems of an estate using a will? If a will was signed and dated a long time ago, but there have been no deaths and births in the family since then, here are some important considerations. Validity of the old will assigned and properly executed. Last will and testament. Remains legally valid unless it is revoked or replaced by a newer will. The fact that the will was signed and dated means it has legal standing. What happens if you have changes in your family circumstances? If you only have a will, the new deaths and births are significant life events that can impact the distribution of assets. If the old will does not account for these changes, it may not accurately reflect the person's current wishes. If the old will does not address the new family members, such as grandchildren. State intestacy. Laws may come into play Intestacy laws determine how assets are distributed when there is no valid will. If the old will is silent about certain family members e.g. grandchildren, those individuals may inherit according to intestacy rules. The remaining assets specified in the will would still be distributed as per its terms. Updating the will to avoid unintended consequences. It's crucial to update the will after significant life changes, naming new beneficiaries and addressing family additions. Ensures clarity. Probate process. If the old will is admitted to probate, the court will follow its terms. If the new will exists but is unsigned, it won't be considered. So the bottom line is an old last will and testament will usually guarantee a messy probate process. What are the drawbacks to a revocable trust? Let's explore the drawbacks of a self-directed revocable trust. Administrative effort. Maintaining a revocable trust requires ongoing effort. You must update. Beneficiary designations retitle assets and ensure the trust is fully funded. While this flexibility is an advantage, it can also be a drawback if you don't keep up with administrative tasks. Remember that revocable trusts have their benefits, such as avoiding probate and allowing for seamless asset management during your lifetime. However, understanding their limitations helps you make informed decisions about your estate planning strategy. What would happen if you forgot to mention a few deaths and births in your family if you owned a trust? The trust will automatically determine whether the assets of the predeceased person are divided among the remaining beneficiaries are passed down to his or her children. The children unnamed in the trust will stay unnamed and not receive anything from the trust. Thank you for watching. Be sure to visit www.nonprofittrust.com.