The very first concern is why would an estate planning lawyer or a trust lawyer use a will at all?
You may have heard that everybody ought to simply have a living trust. The reality is that a properly prepared will is a completely proper tool for estate planning. It has 2 different functions, depending upon the financial scenario of the individual involved.
Real property ownership drives the requirement for a living or revocable trust. If a person does not own any real estate, like a home, vacant lot, cabin, or timeshare, then that person does not necessarily need a living trust.
Why?
As long as the individual does not own real property, she or he can move possessions after death by utilizing gadgets such as a recipient designation or a payable on death stipulation. An effectively completed beneficiary classification or payable on death provision is a completely legitimate method to transfer possessions upon death; no living trust is required for such a transfer. Therefore, a trust attorney or a estate planning attorney can with self-confidence draft a will, even a “basic” will for a client and understand that person can avoid the probate system provided that he or she does not own real property and understands how to properly utilize a recipient designation or payable on death stipulation for the other properties.
An estate planning attorney can also use a will in combination with a living trust, which is likewise called a revocable trust. This is an unique will, usually called a pour over will, which works with the trust to make sure that properties that did not get properly retitled into the trust will be distributed in accordance with the trust plan.
Trusts
A properly drafted estate planning package avoids the long and costly legal process referred to as probate. The key file because estate planning plan is the living or revocable trust.
Although trusts were originally developed for the very rich, today they are commonly utilized in wills and estate planning whenever a person or a household owns real property. It is not smart to include a relied on boy or a child to a real property deed to prevent probate for numerous reasons. The child may go through a divorce or bankruptcy that would place your home in jeopardy. Also, there are unique guidelines that permit avoidance of capital gains taxes that end up being less helpful if you added somebody to a deed throughout an individual’s lifetime.
A trust allows an individual or household to designate somebody else, usually a trusted daughter or son, to transfer property after they pass away without the need for a court order and the long and pricey procedure that is involved in acquiring a court order.
Funding the Trust
Among the issues that can develop with a trust is the funding or re-titling the possessions into the trust. Although the process does not seem like “rocket science,” it is neither instinctive nor common sense. The re-titling process is owned by the historical development of trusts along with the demands of various financial institutions including banks and title companies, that makes it a lot more difficult than one would anticipate.
The majority of financial institutions will require that their kinds be utilized to re-title a property into the name of the trust, regardless of what the will, trust, or other attorney-drafted file states. Likewise, real property positions special issues. Usually not just should the real estate be set up as part of the trust, but it also needs a special deed on the parcel of real estate to get it into the trust.