Thanksgiving is one of the best holidays of the year. It is a time for families to gather for a hefty meal and look back on all the things they have been thankful for. It is also a time that most estate planning attorneys say is a busy time of the year. Why is that? Aunt Susie or Uncle George might have said/done something to knock them out of the Will and Trust. Therefore, Thanksgiving can cause a trust agreement change.
A will is a legal document that allows you to dictate the conditions on how your assets will be distributed when you die. This creates organization that minimizes gift and estate taxes. This is also useful even if you have a trust. A will allows you to direct your assets such as bank accounts, real estate, businesses etc. If you are the owner of a business it shows who will be your successor and retain ownership. Charities are also named in wills. If you are the member of an organization, or looking to leave your assets to a charity organization, this will be stated inside the will. There are many types of wills such as a Holographic will, Oral will, Pour-Over will and Mutual will.
Unfortunately, wills tend to only handle “big ticket” items and some assets may not be covered by the will’s instructions. However, failure to prepare this document will leave assets in the hands of judges and can cause a lot of family tension.
A trust is a fiduciary arrangement that allows a third party, trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts were established to provide protection for grantors or settlors. The trustee has the duty to distribute those assets to the beneficiary based on what is stated in the trust agreement. There are many types of trusts, but one key factor is if the trust is irrevocable or revocable. An irrevocable trust is a trust where the terms cannot be modified, amended or terminated without approval of the grantors named beneficiary or beneficiaries. A revocable trust is a trust whereby the provisions can be altered or canceled dependent on the grantor.
Another key component of a trust is whether its Directed or Delegated. Directed/Delegated trust agreements give beneficiaries more control over how the assets are managed and how trustees are picked.
Thanksgiving allows families to gather together, spread joy, and catch up. It can be a wonderful time or a miserable time, either, can cause a change to a trust agreement. Although the rule of thumb is to not discuss politics, religion, or personal finances, it can be an opportunity to open the door to discussions about the future.
Succession planning and estate planning are important. An estate plan might include a will, a trust, or both. If there is a family business it's important to prepare for what will happen in the future. This can expand from a multi-million-dollar business or just the kitchen silverware. This conversation will happen one way or another, so, it is best to take advantage of the opportunity at hand.
Planning is bringing the future into the present so that you can do something about it now. - Alan Lakein
Estate Planning can be an emotional and frustrating time. It is important to understand timing is crucial, but you have help. An estate planning attorney will draft your will or trust, and can offer you advice to make the best decision. A financial advisor can help you understand your financial situation and prepare for after you pass. Thanksgiving can be the perfect time to recognize issues, and develop a plan for a families financial future.