Most people know that a Will is something they need and should have yet so many times people never get around to making one. They put it off or try to avoid the inevitable and then one day it’s too late. When that day comes in Alabama all of your wishes for your family and friends are left up to the Court and they make the decisions you could have made. Creating a Will does not have to be a difficult task and in the long run will save your family time and money. Let’s face it, nobody wants to think about a will and all that comes along with it but it may be one of the most important things you can ever do for your family.
We are experienced in drafting all types of wills to ensure that your last wishes are heard by not only your family but also the Courts. A will accomplishes several things, among those are:
For assets that do not allow for the naming of beneficiaries (such as some bank accounts and real estate), the will is the place to designate who will get them, as well as any related special instructions.
Some types of assets allow for the naming of beneficiaries (such as IRAs and investment accounts), which enables a direct transfer of the asset without involving the will and has greater authority than the will. These types of assets usually avoid probate and the associated fees and may avoid certain taxes, helping you maximize what you leave to your beneficiaries.
Assets that pass through the will must undergo the probate process.
A Letter of Testamentary is a certificate specifying the name of the individual who has been authorized by the court to deal with the assets of an estate, which includes bank accounts. In order to obtain a Letter, you must apply to the court to open a probate proceeding (if there was a Will) or to open an administration proceeding (if the deceased died without a Will, also called Intestate).
Before a Letter of Testamentary can be issued, the court must hear evidence to determine:
What is a trust? Basically A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries.
Since trusts usually avoid probate, your beneficiaries may gain access to these assets more quickly than they might to assets that are transferred using a will. Additionally, if it is an irrevocable trust, it may not be considered part of the taxable estate, so fewer taxes may be due upon your death.
Often cited as a key reason for establishing a trust, avoiding probate can mean substantial savings in time, legal fees and paperwork. If your assets and property are to be distributed according to your will, probate is the process by which a judge determines the will’s validity. A trust allows your descendants to bypass this process and gain access to the assets and property more quickly. Plus, your family can avoid probate fees, which can be as much as 5 percent of the value your estate. The probate process is also a long one, and can take up to a year or even two to finalize, during which time your family can’t touch their inheritance. In some states, however, the courts allow beneficiaries a certain amount of money for living expenses while they wait for their inheritance to become available.
Another common reason trusts are established is to pay for education. Whether the grantor is paying for one child or several, a college trust fund offers flexibility in how and when money is disbursed for educational expenses. Typically, an education trust will specify that each child’s full tuition and college expenses be paid, after which any remaining assets in the trust can be split evenly among all of the children. In some cases, the children will have different financial needs — for example, if one child attends medical school, while another simply earns a bachelor’s degree. The person setting up the trust may decide to give each child the same amount, regardless of the cost of their education, or provide varying amounts depending on each child’s educational costs
Assets in a trust may also be able to pass outside of probate, saving time, court fees, and potentially reducing estate taxes as well. Other benefits of a trust may include:
There are many types of trusts; a major distinction between them is whether they are revocable or irrevocable.
Revocable trust: Also known as a living trust, a revocable trust can help assets pass outside of probate, yet allows you to retain control of the assets during your (the grantor’s) lifetime. It is flexible and can be dissolved at any time, should your circumstances or intentions change. A revocable trust typically becomes irrevocable upon the death of the grantor.
You can name yourself trustee (or co-trustee) and retain ownership and control over the trust, its terms and assets during your lifetime, but make provisions for a successor trustee to manage them in the event of your incapacity or death.
Although a revocable trust may help avoid probate, it is usually still subject to estate taxes. It also means that during your lifetime, it is treated like any other asset you own.
Irrevocable trust: An irrevocable trust typically transfers your assets out of your (the grantor’s) estate and potentially out of the reach of estate taxes and probate, but cannot be altered by the grantor after it has been executed. Therefore, once you establish the trust, you will lose control over the assets and you cannot change any terms or decide to dissolve the trust.
An irrevocable trust is generally preferred over a revocable trust if your primary aim is to reduce the amount subject to estate taxes by effectively removing the trust assets from your estate. Also, since the assets have been transferred to the trust, you are relieved of the tax liability on the income generated by the trust assets (although distributions will typically have income tax consequences). It may also be protected in the event of a legal judgment against you.