What is the difference between a Will and a Trust?
A Will is a document that allows you to name beneficiaries of your estate assets after your death. A Will is also a great instrument to use to name guardians for your minor children so that you can ensure your children are loved and cared for by the adults of your choosing in the event you are unable to take care of them yourself.
A Trust is a legal entity that can hold your assets while you are alive and dictate how you want your property distributed after your death. You name a Trustee, which can be you while you are alive, and you also name a contingent Trustee, who is given authority to act upon your incapacity or death. The Trustee has a duty to direct and manage the assets of the Trust according to your desires. Placing your assets in a Trust while you are alive ensures your assets avoid expensive and time-consuming probate processes after you die. Trusts are also helpful when you have heirs that might not be able to responsibly manage their inheritance, for example, because they are minor children or are not good with money. In these cases, your contingent Trustee can help distribute money to your heirs over a period of time instead of giving them a lump-sum distribution immediately after your death.
What is a Durable Power of Attorney?
A Durable Power of Attorney is a document wherein you name an Agent who can act on your behalf regarding property, legal and financial matters. This document becomes important when you can no longer act for yourself in these matters, for example upon becoming incapacitated due to dementia, etc. When you give someone else authority to act as your agent, that person can sign on your behalf for banking transactions, pay your bills, talk to your insurance company, pay your taxes, and help sell your property.
What is Probate?
In simple terms, probate is the legal process for distributing your property after you die. Often an attorney initiates the process with the probate court. The court then validates your will and ensures that all of the decedent’s property is inventoried, all debts of the estate are paid, and that the remaining assets are distributed according to your wishes. There are always probate fees, and, of course, the process can take anywhere from 2-12 months.
What is Intestacy?
If you die without a will, you are said to have died intestate. When this happens, state law determines who will receive your assets. In South Carolina, if you die without a will and you have a spouse and children, your spouse receives one half of your estate and your children split the remaining half. This may not be the ideal scenario, particularly if your children are minors.
What is a Revocable Living Trust?
A Trust is a legal entity that is created by the Trust maker, also known as the Grantor, to hold assets that a Trustee will manage and protect for the benefit of the beneficiaries. In a Revocable Living Trust, the Grantor transfers ownership of certain assets into the Trust during his lifetime. Then the Grantor determines how the assets of the Trust will be distributed after his death. Because it is “revocable,” the Grantor has a lot of discretion to amend, and even to revoke the Trust during his lifetime. Additionally, because the Trust is now the owner of the assets, these assets do not have to be reported to the probate court upon the death of the Grantor. This will save time and probate fees because the Trustee can immediately transfer the assets to the beneficiaries, if that is the desire of the Grantor, and thus bypass the court probate process.
What is a Medicaid Asset Protection Trust?
A Medicaid Asset Protection Trust is used to preserve your assets from being whittled away by the cost of long-term care. A Medicaid trust, if funded at least 5 years before you become eligible for Medicaid, can ensure that your hard-earned assets are not just used to pay for mounting medical bills, but that you are able to leave some form of an inheritance to your loved ones.
I am 25 and rent an apartment. Do I have an Estate?
An estate, in simple terms, is everything you own when you pass away. Almost everyone has an estate: when you own a car, have a life insurance policy, clothing, jewelry, etc., you have an estate. Upon your death, your surviving family members will need to take care of all the assets in your estate through a process in the court known as probating your assets. Leaving a Will to direct the distribution of your property is a great gift to leave to those you love.