When planning for an individual’s future, there are many decisions to make. One of the most critical decisions is including a will and a trust in an estate plan. Each serves a distinct purpose, but both are critical to ensure your assets are distributed the way you want them to be.
What is a Will?
Wills state your wishes about your assets and family members after you pass away. It may also state what happens to any pets you own. This is often created to ensure the division of assets is fair and make it easier for your loved ones to determine what to do with your possessions without court proceedings.
Your will must meet the following requirements for it to be valid:
- Legal Age: While most states limit the age at which people can create wills to 18 years old, some states permit those under 18 to have wills.
- Testament Capacity: You must have been of sound mind when making the will. It must be clear that you knew what you were doing and intended to do it. A will is invalid if a court determines that you did not have testamentary capacity when you created it. This determination is made by examining the facts surrounding the creation of the will. For example, a will is not valid if a person suffered from a terminal illness when they created their will.
- Testamentary Intent:This means the will must be in writing and signed by you. Simply stating your wishes orally is not sufficient; the document must be properly written, signed, and dated.
- Witnesses: A will is only valid if two witnesses are present when it is written and signed. These two people must be at least 18 years old and cannot stand to benefit from the will. They also must understand the significance of witnessing the document.
What is a Trust?
In a trust, the grantor transfers property to the trustee, who passes it on to the beneficiary. A trustee has legal responsibility for managing the property in the person’s best interests or people the property intends to benefit.
There are two types of trusts:
- Testament Trust: A will create testamentary trusts. It’s distributed to the heirs after the death of the guarantor rather than when they are alive. A testamentary trust can also make gifts to the beneficiaries.
- Living Trust:A living trust is typically an arrangement wherein a person, called the “grantor,” places their assets in the hands of a third party, called the “trustee”. The grantor gives the trustee power to manage and dispose of their assets. The trust is considered “living” because the grantor retains control over it, even after dying. The grantor can revoke it at any time. If that happens, then everything that was placed into the trust reverts to the original owner.
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Need help with estate planning/wills & powers of attorney? Call GPS Law Group on 704-549 1950. Get help with your estate planning from a local attorney in Charlotte, Gastonia, Concord, Huntersville, and surrounding communities in Mecklenburg County, Rowan County, Cabarrus County, Iredell County, Gaston County in North Carolina.