Yesterday, I got off the phone with my mom with some family updates— the ongoings of the family in the States, Antigua, and Tobago. Most of the news was positive; one piece wasn’t so positive, though. I learned that one family member was at the beginning stages of a debilitating mental and physical illness.
When I hear about illness, I can’t help but think about death. And when I think about death, I can’t help but think about estate planning. I hope that my older and not-so-healthy family members have their affairs in order. Hearing news like this reminds me that I need to take care of my affairs while I have youth and health on my side.
If you are looking for a place to start your estate planning, here are two places to begin.
Create a living trust: A living trust is a legal document created by you (the grantor) during your lifetime. It is similar to a will in that a living trust states exactly what your wishes are with regard to your assets, your dependents, and your heirs. The main reason that people establish a living trust is to avoid probate proceedings, which can be a time-consuming and costly process. Benny L. Kass, housing counsel for the Chicago Tribune writes, “Under state laws, the trustee — and not the individual (the grantor) — owns the property, and in general only property owned by the deceased individually is probated. Property held jointly will automatically pass to the surviving owner, without having to go through probate.”
Privacy is another reason why you may want to create a living trust. Probate is a matter of public record, unlike living trusts, which are private. For a number of reasons, some individuals may not want to disclose who their ultimate beneficiaries will be.
There are two types of living trusts. A revocable trust is created while you are living. It is revocable because the grantor or the individual creating the trust has the right to change its terms or cancel (revoke) the trust at any time, for any reason, during his or her lifetime. On the other hand, upon death, the trust becomes irrevocable; the trust property is distributed by the trustee in accordance with the terms of the trust.
Fees for drafting living trusts vary. If you are willing to do it yourself, it will cost $60 to complete your living trust online with site like Nolo.com. If you hire a lawyer, you can expect to between $1,200 and $3,000.
Draft a will. Despite the images that movies and television promote, estate planning isn’t exclusively for the wealthy or the old. To alleviate family drama, smart folk take time to explicate clear guidelines, orders, and plans for when they die or in case they become disabled. Most young adults in their 20s or early 30s who are single and childless can probably get by with a no-frills will using computer software like Quicken’s WillMaker Plus.
Those with more complicated financial situations: assets over $2 million, a child with disabilities, children from a previous marriage, or particular wishes for what they want done with their assets should consult a lawyer. With guidance and support from a lawyer, it will be easy to draft a comprehensive will which will cover: 1) what people or organizations will inherit which property; 2) who will serve as guardian to care for minor children; 3) who will manage the property left to minor children; and 4) who will serve as executor — the person who will carry out the wishes of the will.
BMWK: Have you started your estate planning?