Wills and Trusts

Wills

Formerly called a "Last Will and Testament", this document was once used to publish someone testimony on how they were brought to salvation in the Christian faith, and how their property would be distributed to the extent allowed by the current laws of that county. Today, wills are secondary documents in the process of transferring ownership on death. Beneficiary designations, joint tenancy, dead effective on death, and of course trusts, are the primary transfer vehicles.

In truth, there is no such thing as a "simple will." The matters that wills are designed to address are rarely simple and the value of one's estate has little to due with the complexity of such matters. Nonetheless, you can still do your own will as long as it is entirely in your own handwriting, dated and signed (called a holographic will). The challenge with holographic wills is the possibility for ambiguity and omission.

Wills today are used to place assets into a trust that were somehow left out (a "pour-over" will), or they contain trust inside them (called testamentary trusts). Assets that are distributed by a will must go through the process called "probate" which is the Court-supervised management and disposition of a deceased person's estate.

Trusts

Property distributed by a trust is not subject to probate because the title to that property is not held by deceased person, but rather by their "trustee." This instrument actually creates a "legal fiction" by splitting the title to property into three different entities: the Trustor who gives the property to the trust; the trustee who hold legal title to the property; and finally, the beneficiary for whose benefit the property is administered. This is a legal fiction because all three elements of title can be in the hands of the same person, yet the legal will recognize the distinctions.

Trust are not complicated to administer or maintain, and once properly established are flexible in their ability to accomplish the financial wishes contained in them. Contrary to popular belief, property held in trust is protected from the creditors of those creating the trust if the trust is for their benefit.

There many kinds of trusts. The most common are:

" A "Living Trust" is one which is effective during the life of the person who created it. It is usually "revocable."
" A "Testamentary Trust" is one which only become effective upon the death of the creator. This type trust may be created within a will or within a living trust.
" A "Special Needs Trust" can be used to place an asset for the benefit of someone, who if they received the asset directly, might loose the ability to remain qualified for public assistance.
" A "Medicaid Miller / Qualified Income Trust" can be used to administer an asset for someone, who if they received the asset directly, might lose the ability to remain qualified for Medicaid assistance.

Dead Effective On Death

Recently, Nevada enacted a statue that allows the owners of real property to execute a deed convey the property to the parties of their choosing which only become effective upon their death. This type of dead may be changed at any time by the grantor because the interest of the grantee does not "vest" until the grantor's death. Accordingly, this can be an inexpensive way to distribute property and avoid probate without the need for a trust.