The creation of a trust can have a profound impact on its identified beneficiaries. If handled correctly, these estate planning tools can provide financial resources for years to come. The assets contained within those trusts can provide money needed for a beneficiary's education, a beloved pet's care, to further a charitable purpose, or provide a beneficiary with some extra cash to spend on whatever he or she desires. Trusts don't last forever, though, which is why this week we'll briefly look at how trusts can end and what happens when they do.
Many Arizonans share accounts with a spouse or other loved one. While these accounts can become subject to legal proceedings like divorce, they can also play a pivotal role in estate planning. Generally speaking, a jointly-held account will transfer to the other owner upon one owner's death. But what happens when that second owner passes away? Without an estate planning document to dictate that, the assets in that account may be subjected to the probate process. This can be costly, time-consuming, and leave assets vulnerable to claim by those who the deceased may not have wanted to be involved.
Pets can become an integral part of our families. Millions of Americans treat these animals like their own children, pampering them and providing them with the utmost care. While humans have a longer life expectancy than most pets, oftentimes owners pass away before their beloved pets. So, in these circumstances, who is left to care for the deceased individual's animal?
Estate planning is often seen as a way to dictate how assets will be distributed to one's family upon death. This can sometimes be a pretty straightforward process, especially when assets are to be divided amongst a spouse and children. Since this is the prevailing view of those who think about estate planning, many individuals without spouse and/or children often determine that estate planning won't benefit them. But these individuals are wrong.
There are many issues to consider when estate planning. This is especially true to those who have a significant number of assets. For these individuals, merely identifying and valuing all those assets can be a headache. Of course, not everyone has vast amounts of wealth to leave to loved ones, but even those of modest means can benefit from estate planning.
Effective estate planning is crucial to avoid probate litigation. Those who have ambiguous or vague plans can see their estates' financial health deteriorate significantly while litigation is drawn out. Such legal action can also lead to familial strife that can last a lifetime. This is why it is important to engage in effective estate planning and make sure that any changes to an estate plan are clearly valid.
Getting divorced is no easy matter. While it can leave some individuals feeling emotionally devastated, others may be excited to start a new chapter in their lives. Regardless of which side of the spectrum on which a new divorcee falls, the stark reality is that change will occur, touching nearly every aspect of life. This includes estate planning. Those who fail to take another look at their estate plan after divorce may be setting their estate, and their loved ones, up for trouble.
Estate planning can be as simple or as complicated as is necessary to meet an individual's identified needs. For some, a basic will with easily understood provisions is enough to bring their estate planning goals into reality. Others, though, require much more detailed documentation. This may be due to their high net worth, or it may have to do with the restrictions they wish to place on their estate's assets upon passing. Either way, estate planners need to ensure that they fully understand the legal ramifications of all the legal agreements they enter into.
Trusts are common tools used in estate planning and can be utilized to distribute assets with certain conditions attached to them. For example, assets maybe left to a beneficiary with strict rules that the proceeds of the assets contained within the trust can only be paid out when the beneficiary turns a certain age. There are a wide variety of trust types, each with their own benefits. This is why it is imperative that those engaging in estate planning fully discuss their estate planning options with an attorney of their choosing.
There have been a number of famous people pass away lately, and each one has left a story to tell about how they chose to handle their estate. A few months ago, for example, we discussed how famed singer Aretha Franklin neglected to engage in estate planning, thereby leaving her assets open to creditor claims and the grasp of all individuals who feel they are entitled to a share of the estate.