Kent Meyerhoff of Fleeson, Gooing, Coulson & Kitch, LLC, spent some time discussing wills & trusts and various other items with us. I've probably lost some of you already ;-) I'm sure to lose more as I continute, but let me roughly explain a few terms:
- Guardian - person assigned by you to be legally responsible for your children upon your death.
- Conservator/Trustee - person assigned by you to be legally responsible for your money and posessions upon your death.
- Executor - person who is responsible for finalizing your affairs, working through probate, paying bills after your death. Responsibilities usually last for 9-12 months.
- Will - states your wishes for children and assets upon your death, but has no legal significance until your death and must be presented before the courts by the Executor to enter into probate and be executed.
- Trust - states your wishes for children and assets upon your death, but has legal significance once signed and put into place. Does not require your death to be applicable and does not have to go through probate.
- Power of Attorney - two kinds: financial and medical. POA gives legal rights to a person you designate to manage your finances or medical affairs in the event that you are unable to or do not have the mental capacity to do so on your own. Obviously, while you are still living.
- Living Will - establishes your wishes for staying on life support or "pulling the plug" in the event that you are being kept alive by life support machines.
It's very easy to get caught up in the details, so I'm going to try to relay some big picture points Mr. Meyerhoff made today. Obviously, every family's needs and situations will be different, so as I try to generalize, keep that in mind.
When choosing guardians, you may want to choose someone who raises their children in a similar way or a way that would be pleasing to you. Consider lifestyle, faith, values, way of life, proximity to family...whatever is of value to you.
When choosing a trustee/conservator, you will want to select someone you trust and has similar money philosophies because he/she will be the one determining when and how much of your money gets distributed to your children's guardians until they reach the age in which their inheritance is given to them. Often times people do not allow children access to their inheritance until the age of 25 or older. Sometimes it is given in increments at specific ages.
Consider discussing your wishes and long-term desires for your children with the guardians and for your finances with the trustee/conservator. It's also a good idea to ask their permission to be listed as these designations, so that they aren't surprised and should they refuse, you can choose someone else.
What's the difference between wills and trusts? Wills require less preparation to set up and thus cost less ($500-800), but they must go through probate and time & expenses will be occurred at that time - something your executor will deal with. Trusts require more up-front preparation and all assets are transferred into the trusts' ownership. The basic joint tenancy (??)trust can cost between $1000-1500, but they do not require probate (or those extra expenses) at death and "continues on after you die."
Be cautious when using online legal documents or legal document software. Sometimes there are "holes" in those documents. Also, just writing up something at home will help in determining your wishes, but will require the courts' involvement and determination of how your estate is divided and who receives guardianship of your children. A note at home, most likely, won't be legally binding. My impression, was that if at all affordable, it's worth the peace of mind in knowing that documents prepared by a professional who you have met with will be legally binding and can be personalized to address any needs deemed important by you.
Living Wills can be beneficial in that it takes the life/death decision out of the hands of your family members, has been decided by you and is determined by doctors acknowledging that your life is dependent on the life support machines. Yet, on the other hand, some would rather leave that decision in the hands of their family members, being able to take into account all circumstances at the time. Very much a personal preference.
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