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Disposing Of Your Stuff

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Let's face it ... we all have "stuff". That "stuff" can range from real estate, to bank accounts, to stocks and bonds, to pensions, to jewelry, to clothes, to artwork and so on. Moreover, when we pass, we all want our "stuff" to go to whom we want it to go to ... not to someone chosen by the State. There are several ways to convey your "stuff" to those you want to get it. There is no "best way for all" to accomplish that goal. But some ways may be better than others. For example, putting your cash under your pillow with a note saying, "This goes to X" is probably not the best way to get your cash to X. Rather the better solution is to execute one of the many testamentary documents, all of which tell others to whom you want your "stuff" to go to and who you want to do it. Then your goals are accomplished. This article will concern about some of the testamentary methods available to you.

 

The least technical of the testamentary documents is a "Will" or "Simple Will". A Will is a document which states your wishes as to what you want done with your "stuff". When a client requests that I prepare a Will for him or her, the questions I generally ask are: 1) what are your assets (what "stuff" do you have and how is each item titled e.g., do you own it alone or with another or what); 2) what are your liabilities (and what, if any liabilities do you want paid from your assets after you pass); 3) do you have any special bequests, that is, are there some things which go to specific people such as your bomber jacket go to Cousin Billy or your family Bible to Aunt Jean; 4) after your list of specific bequests, what do you want done with the remainder of your "stuff"; and lastly 5) who do you want to do all of that.

Assuming all questions are fully answered and your Will is prepared and properly executed, upon your passing, your Will should be admitted to Probate. Once the probate process is complete, your "stuff" will be distributed to that person(s) whom you designate in your Will. You should note that the probate process can be a long, complicated and expensive process. Also, there can be challenges and claims to your wishes from beneficiaries who got nothing and/or from creditors. So, it is best to consult an attorney in your jurisdiction who should be able to help you prepare a "Will" and avoid some of the common pitfalls which can occur.

Another testamentary document which conveys your "stuff" upon your passing is a "Living Trust". A Living Trust is a type of Trust created during your (you are called the Testator) lifetime. Generally, you are also the Trustee until the time of your death. The Living Trust document first creates the Trust and then provides that certain of your assets be deposited into the Trust. For example, one common asset often deposited into a Living Trust is real estate. To accomplish this, execute a Quit Claim (or similar deed) to transfer ownership from you to the Trust. Assuming you are the sole Trustee of your Living Trust, it is basically still your asset. Other assets can similarly be included in your Living Trust such as bank accounts, boats, cars and so on.

Living Trusts may either be revocable or irrevocable. Most common ones are revocable, meaning that any asset you transfer into your Living Trust can be sold by you at any time before your death. So, if your car is an asset in the Living Trust and you want to get a new car, just sign the Title as "XYZ Living Trust by XYZ, Trustee" and then sell the car. The same is true of your house of any other asset in the Trust.

Being so, what are some pros and cons of a Will vs Living Trust? Some pros are a Living Trust can often minimize or even eliminate the probate process. The probate process can be long, sometimes taking more than 2 years. Another pro is a Living Trust need not be filed with a Court whereas a Will must be filed be so there is the potential for your Trust plan being more private. Another pro is a Trust can potentially avoid Guardianship and/or Conservatorship. A third is it helps you get your affairs organized. Some cons of using a Trust over a Will include that it generally costs more to establish a Trust than execute a Will; transferring assets from your name to a Trust can sometimes be a challenge; and despite a Trust, you still need some kind of Will for items which cannot be included in a Trust such as assets which are not titled (furniture, clothing, some artwork and more), even if the Will simply says the remaining assets from your estate "pour over" into the Trust.

As stated, Trusts may also be irrevocable. They are also more complicated and vary significantly from state to state. You should discuss if this is for you with an attorney or with your attorney.

Finally, there is a "Living Will". This is a document which expresses your wishes regarding certain medical decisions such as whether to withhold hydration or food and is a document used when you are unable to make those decisions for yourself. This document also varies from state to state.

I hope this has been helpful. Estate planning is sophisticated and should only be done by you with an attorney you are comfortable working with.

If you have any questions, please send them to me via the newsletter. I will try to answer them all and may post some here.

About the author:

Jim grew up in Philadelphia. After graduating from Penn State with a B.A. in history, Jim went to Villanova University School of Law where he graduated with a J.D. After graduation, Jim first went to work for the City of Philadelphia and then became employed by the Commodity Futures Trading Commission. In private practice, Jim's areas of concentration have been securities, commodity futures, real estate, tax, wills and trusts.

 

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Last modified on Saturday, 10 February 2018 14:08

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