Comprehensive estate planning begins with a last will and testament and a trust. These two instruments can be customized to meet your exact needs and objectives, ensuring that you leave behind a legacy for your family and others. It is imperative that you have experienced legal counsel draft and execute your will and trust so it meets the basic requirements of the law and effectuates your estate planning goals. SederLaw’s Estates & Trusts attorneys are ready to assist you.
The Last Will and Testament
The primary purpose of a last will and testament is to determine who inherits the assets owned by an individual (known as the testator) upon his or her death. It should name an executor, the individual who will be in charge of administering the estate. The executor has numerous responsibilities such as distributing assets and paying the estate’s debts. A will can also be used to designate guardians of minor children in the event the parents pass away before their children become adults.
If you die without a will, known as dying intestate, you will have no control over what happens to your estate’s assets. At death, your estate will be administered in accordance with a statutory schedule that sets forth who will inherit which items of property. You may not wish for an individual to inherit certain assets, but in the absence of a will, the law may allow it anyway. Also, you will have no say over who administers your estate or who will act as guardians of your minor children.
What Are the Requirements For A Last Will and Testament?
There are a few essential elements that must be present for a last will and testament to be valid. A knowledgeable attorney will ensure that these criteria are met:
- Age. The testator needs to be at least 18 years old.
- Mental capacity. The testator must understand the nature of his or her estate (what assets he or she has) and the effect of making a will, which is essential to transfer those assets to heirs.
- Writing. With only a few exceptions, a will needs to be in writing to be effective.
- Signed. Either the testator needs to sign the will or, if he or she is unable to do so, the testator needs to direct someone else to sign it in the testator’s presence.
- Witnesses. At least two individuals who do not stand to benefit from the will must witness the testator sign it.
The will must also be written in such a way that it effectively transfers assets to beneficiaries upon the testator’s death. If a document simply lists assets and individuals without the proper language to convey those assets, it will likely not be considered a valid will.
Revocable and Irrevocable Trusts
A trust is a legal instrument by which an individual (known as the grantor) transfers assets to another individual (the trustee), who is responsible for managing the trust for the benefit of a third party (the beneficiary). The trustee is obligated to follow the terms of the trust as well as the requirements of Massachusetts trust and estate law.
Contrary to popular belief, trusts are not just for the wealthy. It is important that you consider creating a trust as part of your overall estate plan. Trusts can accomplish the following goals, among others:
- Allowing periodic distributions of trust assets to children to help meet their financial needs
- Providing for the unique needs of children with special circumstances, such as medical issues, money management problems, or drug addiction
- Avoiding the expensive and time-consuming process of probate, which is a court-supervised procedure required for administering most estates
- Protecting the privacy of the grantor since trusts are generally not filed with the court (unlike wills)
- Lessening the impact of estate taxes
The most commonly used trusts are revocable and irrevocable trusts.
Revocable trusts. These can be revoked or amended at any time during the grantor’s life, meaning that assets transferred into a revocable trust can still be accessed and used. The trustee, who is often the grantor, can manage the trust as he or she sees fit. The primary benefit of these types of trusts is therefore control over the assets. At death, the trust will usually become irrevocable and the property held in it will pass to beneficiaries.
There are disadvantages to revocable trusts. Because assets held in the trust are treated as if they are owned by the grantor, these instruments will not protect assets from certain creditors. There are also no immediate tax benefits with a revocable trust.
Irrevocable trusts. As the name implies, this sort of trust cannot be revoked (or changed) once created. Assets transferred into the irrevocable trust are considered to be owned by the trust, not the grantor. The trustee is given broad authority to manage the trust provided that the trust terms and estate law are followed. Often, these instruments are used to provide legacy gifts to children and grandchildren.
One of the main benefits of the irrevocable trust is the protection of the grantor’s assets against creditor claims and lawsuits since the property is considered to be owned by the trust. This can be used to reduce the number of assets that are counted against the grantor when it comes time to apply for MassHealth and other government benefits.
Since these trusts cannot be revoked or modified, they are far less flexible than revocable trusts. This impedes the grantor’s ability to adapt to certain life changes like remarriage or incapacity. A separate tax return must also be filed for the irrevocable trust.
Contact Our Worcester Wills and Trusts Attorney
Wills, trusts, and other estate planning tools are necessary to prepare for your and your family’s future. Let SederLaw’s trusted attorneys explain how a last will and testament and trust can get you started on creating a personalized estate plan. Connect with our Estates & Trusts team today.