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Wills are legal documents that outline how assets will be distributed upon death, usually signed by their testator in front of two impartial witnesses and notary public.
Wills cannot disinherit a spouse or child (unless specifically permitted in your state). Additionally, some states require self-proving affidavits in order to validate holographic wills.
A will is a legal document that expresses the wishes of an individual (the testator) regarding their estate (property). It typically names an executor to carry out its instructions and beneficiaries for its distribution; and may also set up trust arrangements.
Wills should typically be signed in the presence of two independent witnesses who do not have an interest in it. Once signed and executed properly, a will can then be “self-proved” via witness affidavits in some jurisdictions to bypass probate court; alternatively holographic wills do not require witnesses but may need to be notarised as additional requirements apply.
Wills typically only apply to assets owned in an individual’s individual name and do not extend to assets held jointly with another party or accounts with designated beneficiaries (e.g. retirement or investment accounts). Without one in place, probate court will determine where property should be distributed – known as dying intestate – with typically at least some minimum share being guaranteed for survivors and children of testators.
Trusts are legal arrangements designed to safeguard your financial assets in accordance with your wishes during and after your lifetime. Three key participants make up a trust: grantor, beneficiary and trustee.
The grantor of a trust is the individual or institution responsible for creating and setting its terms; beneficiaries are those entitled to receive principal and income from it; while trustees are individuals or institutions charged with managing and investing trust assets according to its terms.
Some trusts offer protections to beneficiaries, including spendthrift provisions that limit how trust funds may be spent. Others can help reduce estate taxes or provide for children or individuals with special needs, among other goals.
Testamentary trusts, often irrevocable trusts created within wills, can help minimise or avoid probate costs while protecting heirs of grantors from creditors.
A power of attorney authorises another to manage financial affairs for its principal in case they become incapacitated. A durable or springing power of attorney may take effect immediately upon execution, or it can require evidence from a physician that the principal is incapacitated before becoming effective. Furthermore, its scope can be restricted as desired; for example just bank accounts and insurance or not real estate transactions would qualify.
CaringInfo has an informative guide that can assist in understanding the specific powers associated with a power of attorney. Although completing one may feel intimidating, doing it early will protect yourself in case any issues arise later on.
To avoid abuse, it’s advisable to request that your agent maintain accurate records of transactions and report regularly back. Furthermore, you could appoint an independent monitor who would supervise his/her actions; when revoking power of attorney it must be communicated both to them and any third parties that received or relied on it in writing.
A will and trust differ primarily in that a will only governs assets owned in your individual name, such as real estate, personal belongings and cash. A will also outlines your wishes regarding how these assets should be managed and distributed. Wills must go through probate court for approval before becoming public record; trusts on the other hand typically avoid probate altogether and can remain more private.
Liz Arias: To create a will, typically list your assets and designate an executor (usually your lawyer or other professional) who will oversee their distribution. In addition, include guardians for any minor children as well as special instructions.
Your signature is what legally seals a will, but for its validity to take effect you must do it in front of two witnesses who do not benefit financially from your estate. These individuals should be considered disinterested as well.