Why FES Will & Trust?
Planning for life’s uncertainties brings you and your family peace of mind.
But a will alone is not enough. You also need a living trust, health care power of attorney, and financial power of attorney.
FES Will & Trust is the comprehensive, affordable, easy-to-use package with everything you need. No add-ons, no surprises.
- Developed by attorneys
- Comprehensive low-cost package includes will, living trust, health care and financial powers of attorney
- Endorsed by credit unions and community banks
- Superior, unlimited customer support
- Full legal documents sent directly to you for signing & notarizing
FES Will & Trust will assist you with these essentials:
- Preparing financial & health care powers of attorney
- Talking with your family now to decide how to handle your financial and medical affairs should you become incapable of making your own decisions
- Preparing a last will and establishing a living trust that will distribute your property according to your wishes after you die
Do I need a will?
The purpose of every will is to describe how you want your assets to be distributed to your heirs upon death. One reason for having a last will is that if you don’t specify how your property is to be distributed, state law already has a plan for you – and it may not be the plan you want.
For example, intestacy law (i.e., you die without a will), if you are married and have children, your estate will not all go to your spouse. Your children will each get a share of your assets, and this can often be a problem. It could result in your home, or a major income-producing asset, split among the children – and where would that leave your spouse?
The problems are compounded if your children are minors, and their share of your assets has to be held separate from your spouse’s share. And, if you have no children, but your parents are living, the result can be much the same – your estate will not all go to your spouse.
Plus, step-children whom you have not adopted will not inherit from you unless you have a will. So, if you want your spouse to get everything, or you want to include step-children as heirs, you need a will.
A last will ensures that your loved ones receive what you want them to receive, not just what the court thinks they should receive.
What is a last will?
A last will is the most recent expression of your desires for the handling of your financial and personal affairs when you die. A last will revokes any prior wills or codicils you may have made. A codicil is simply an amendment of a will.
A last will is a legal document that complies with certain formalities. It must be witnessed by two adults who are not beneficiaries under the will.
What is a pour-over will?
A pour-over will is a will established by an individual who has already taken the necessary steps to set up a trust, so that upon the death of the individual, all of his or her assets are to be transferred – or “poured over” – to the trust. By doing so, the individual ensures that his or her estate has an explicit direction to shift assets into the trust.
A pour-over will adds a degree of safety and peace of mind to an individual’s estate planning, because any assets that were not included in the trust, for one reason or another, will be poured-over to it by virtue of the will. The will can also stipulate that the assets intended for the trust be distributed to the beneficiaries if, for some reason, the trust itself is not able to be created or is invalid at the time of the individual’s death.
What do I need to consider when preparing my will?
Nobody likes to think about dying. But death, like taxation, is unavoidable. If you care about what will happen to your assets when you die, and you wish to make proper provision for your loved ones, then you should ensure that you have a valid and up to date will.
Before making a will, however, you will need to consider the following:
- Your property – make a list of everything you own and how much it is worth. Include your home and any vacation property you may have, money in bank accounts, stock, pensions, insurance policies, any personal valuables and any business interests you own.
- Providing for your loved ones – who would you like to bequeath your property to? Make sure that you make proper provision for your spouse or partner, children, extended or previous family members and friends. Do you want to leave some money to a particular charity? Do you want to put any conditions on any of your bequests? A common condition is that children must reach a particular age, say 21, before being entitled to the money that you leave them.
- Guardians – do you have any minor children? If so, who would you want to care for them if you were to die before they reach the age of 18?
- Your business interests – what would you like to happen to any business interests you may own after you die?
- Any other wishes? Are there particular arrangements you wish for your funeral? In particular, would you prefer to be buried or cremated – or do you have some other preference? How do you feel about organ donation?
- Appointing Executors – executors are people you appoint to administer your estate i.e. carry out your wishes under the will when you die. This could be a family member or close friend, or an experienced professional such as an attorney. A common and often sensible combination is to appoint both a family member and an attorney. Make sure that you appoint someone who understands financial issues and don’t forget to make sure that they are prepared to take on the role of executorship should you die. This is vital, as if you have not checked with them first, they could refuse to act as an executor, thus leaving the estate without someone you trust to take care of it. It is good advice to review your will at least every 5 years and especially on any major life changes such as marriage, divorce, or having a child.
Your personal representative
Another purpose of a last will is to appoint certain people who will be very important in handling your personal and financial affairs after your death. One of these people is your personal representative, commonly called an executor. You can name a first choice and alternates for a personal representative in your will.
Before making a will, however, you will need to consider the following:
Your personal representative is responsible to find your will, admit it to probate, collect your assets, pay your debts, and generally see that your wishes, as expressed in your last will, are carried out. You should choose someone for this job whom you trust to carry out your wishes.
Any adult person (at least 18 years old), who is legally competent and a U.S. citizen, may be your personal representative. You may name your spouse or an adult child to be your personal representative. Your representative does not need to reside in the same state as you do, but it will be more convenient if they do. For an out-of-state representative, you need to make sure the probate court knows how to locate them – otherwise, they may be unable to serve.
Choosing a guardian
If you have minor children, you will also want to name a legal guardian for them in the event of your death. This is true even if your spouse is still alive and in good health, in case you and your souse are killed in a common accident, etc. The purpose of the guardian is to care for and raise your children at least until they reach age 18.
Any adult person (at least 18 years old), who is legally competent and a U.S. citizen, may be a guardian of your children, including an adult child of yours. You should choose a guardian carefully, and possibly name alternate choices. Also, if you want to name a guardian, it must be done in a last will – you cannot name a guardian in a trust instrument or power of attorney.
If you are married, you and your spouse should be careful to name the same choices for guardian – otherwise, it could lead to confusion, and your wishes could end up frustrated. If you and your spouse fail to name a guardian, the probate court will find one.
What about probate?
Normally, a will must be probated under court supervision to extinguish debts and to change the legal title of your assets into the names of your heirs. However, you may request in your will that your estate be probated “independently,” which gives your personal representative greater freedom to act without formal court supervision.
If you own property in another state, it will need to be separately probated in that state. In any event, make sure your personal representative knows where to find your will. You might also want to give him or her a copy of your will.
What would happen if someone died with a living trust, but without a pour-over will?
The result might be two distribution plans, one for the assets in the trust, and another distribution plan for the probate assets. In some cases, the two distribution plans might be alike because the beneficiaries of the trust are the same people who would inherit if the decedent did not have an estate plan. However, if the beneficiaries are not the same as the heirs of the decedent, the assets would be distributed to two different groups of people. For example, if the trust left all of its assets to charitable organizations, and the decedent did not have a pour-over will, any probate assets would not go to the charities, but would be distributed to the testator’s nearest relatives.
Why would assets not be transferred to the living trust by the trustor(s)?
There are several ways that this can happen, such as negligence, mistake, and procrastination. Sometimes lack of understanding about how a trust works contributes to this problem. Confusion might also be a factor, particularly when real property is refinanced. The lender often requires that the property be taken out of the trust when it is refinanced, but the lender probably will not encourage the owner of the property to transfer it back to the trust after the refinancing.
Executing the will
After you’ve drawn up your will, there remains one step: the formal legal procedure called executing the will. This requires witnesses to your signing the will. In all states, the testimony of at least two witnesses is needed as proof of the will’s validity. In some states, the witnesses must actually show up in court to attest to this, but in a growing number of states, a will that is formally executed with the signatures notarized (and a self-proving affidavit attached) is considered to be self-proved and may be used without testimony of witnesses or other proof, assuming there is no conflict about the will, such as a will contest.
Who should you pick to be your witnesses?
The witnesses should have no potential conflict of interest-which means they should absolutely not be people who receive any gifts under the will, or who might benefit from your death. The witnesses will watch you sign the will and then sign a statement attesting to this.
Where to keep your will
You want your will to be found. If it’s hidden, it may stay hidden. Keep it in a safe place, such as in a fireproof box at home (you can buy one at an office or department store) or your lawyer’s office. You should also keep a record of other estate planning documents with your will, such as a trust agreement, IRAs, insurance policies, income savings plans such as 401(k) plans, government savings bonds (if payable to another person), and retirement plans.
While many people keep their wills in their safe deposit boxes at a bank, in some jurisdictions the law requires those boxes to be sealed immediately after death, until the estate is sorted out. Needless to say, if your will is inside that box-or your cemetery deeds and burial instructions-sorting things out might get pretty complicated. If you do keep it in a safe deposit box, make sure to provide that someone else (and certainly the executor you name) can get at the will when you die. Tell your executor and your beneficiaries where the will is located, and make sure your executor, or someone you trust, has authority, and a key, to open the box after your death. Many estates have gone through long probate delays because the bank didn’t have permission to let anyone open the safe deposit box except the person who had just died. If you name a bank as executor or co-executor, deliver the original will to the bank for safekeeping.
What Is A Living Trust?
A Will comes into play only after you die, but a living trust can actually start benefiting you while you are still alive. A living trust is a trust established during your lifetime. It is revocable, which allows for you to make changes. You will transfer substantially all of your property into your living trust during your lifetime, and any omitted assets can be transferred into the trust at the time of death through the use of a simple Pour-over Will. By appointing yourself trustee, you control all the assets in the trust, meaning you do not lose control of your assets. Married couples typically share control as co-trustors and co-trustees. You should always make a Pour-over Will at the time that you establish your trust.
A living trust will be used as the mechanism to manage your property before and after your death, as well as provide how those assets, and the income earned by the trust, are distributed after your death. If you should become incapacitated or disabled, the trust is in place to manage your financial affairs, usually by a successor trustee, if you were serving as trustee. A living trust is not subject to probate, and therefore, all provisions of the trust will remain private.
Is A Living Trust For Me?
If you want to avoid probate, you need to think about having a living trust. A will is always subject to probate. The way to avoid probate is to place some or all of your assets in trust so they are not subject to probate.
If you are concerned about the costs or delays of probate, personal incapacity, estate taxes, heirs with special needs, financial management, or the risks of joint ownership, a living trust may be for you.
To be sure, a living trust is more complex than a simple will, but the potential future savings for yourself and your family are tremendous. A living trust could well be the key to your family’s financial security.
Benefits Of A Living Trust:
You Can Control Distributions.
Young beneficiaries could make poor decisions when receiving lump sums of money from life insurance or proceeds from the sale of a house. A living trust can hold money until a predetermined age or make partial distributions as beneficiaries reach certain ages. Early distributions for education, health, living expenses and support requests can be approved by the Successor Trustees you appoint.
Example: A beneficiary could receive a early partial distribution for a down payment on a home if the active Successor Trustee(s) feels the trust’s creators would approve the early distribution.
Maintaining a home for dependents.
A trust can continue paying your mortgage, tax and utility costs until your children finish school, at which point they and their guardians vacate the home and the home is sold. For blended families, if the deceased spouse owned the primary residence, a trust may allow the surviving spouse to continue living in the home before it is distributed to the deceased owner’s heirs.
Special needs provisions.
Those receiving disability income may have issues if they receive an inheritance. Inheritances for such a person can legally be held in a trust until needed to prevent a disruption of disability income.
Providing for pets.
Pet food and vet visits can be costly. A trust can set aside a sum of $5,000 – $10,000 to reimburse the person who will take care of your pets. Any amounts left after your pets have passed can be returned to the estate or given to a charity.
Probate is the legal process of changing title to your assets and paying any debts you owe after your death. The process is administered by a judge of your state’s probate court. Many people want to avoid probate because it can take months or years to complete, tends to be costly, and is a matter of public record. In contrast, a living trust can distribute your assets more quickly, cheaply, and is completely private. In short, it helps cut through probate “red tape.”
A living trust avoids probate by transferring your assets now, during your lifetime, to the trustee. At your death, the assets already belong to the trust, so they are not included in your probate estate.
The key to successful avoidance of probate is to “fund” the trust by transferring your assets to the trustee while you are alive. This can be done by drawing up property deeds and schedules of assets, etc., and should be done when you first create the trust. However, assets can be added to, or removed from, the trust at any time during your life.
There are no tax consequences when you transfer your assets into the living trust. The transfer does not trigger a capital gains tax or a new cost basis. However, a bare living trust will not, by itself, shelter your assets from estate taxes at death.
For a married couple, however, a living trust can shelter part of the total estate from estate taxes after the first spouse dies. This is done by making the decedent’s part of the estate irrevocable after death and separating it from the surviving spouse’s share. By limiting the survivor’s right to withdraw assets from the decedent’s share, that part of the estate will not be taxed when the survivor dies, keeping the government’s hands off your estate.
However, the survivor can receive all the income from the decedent’s share and even withdraw some of those assets. And of course, the survivor retains full rights over his or her share of the trust. This is an effective way to eliminate all federal estate taxes for estates up to 1.2 million dollars in 2009.
A Flexible Planning Tool
A living trust is a very flexible planning tool. For example, you can provide for someone else to take over as trustee in the event of your disability or incapacity, yet avoid a public judicial hearing or conservatorship proceeding.
You can provide for beneficiaries with special needs, or delay the inheritance of your estate until the beneficiaries reach a certain age, or have your estate distributed in installments.
Because a living trust is revocable, you may change or revoke the trust at any time during your life. You can do this yourself, without formal witnesses, a notary public, or even a lawyer, although you should seek legal counsel for anything other than a minor change.
A living trust also avoids many of the risks of liability associated with joint ownership. Assets you hold jointly with someone else are subject to the debts and liabilities of your joint owner, but assets in the trust can be protected from any claims of the creditors to your heirs.
Living trust and will differences
Effective date: A living trust takes effect while you are alive. A will takes effect after you die.
Incapacitations: Living trusts can make the management of an estate during an incapacitation easier than power of attorneys alone. If an asset is in a trust, financial institutions such as banks must recognize your successor trustees during an incapacitation. Institutions are not required to accept powers of attorneys.
Privacy: Wills are made public during the probate process. Living trusts are private documents and in many states are not recorded.
Probate: Probate is not a tax but a court process to validate a will and ensure its instructions are followed during the transition of an estate. Probate’s cost and length differ in each state. Neither wills nor testamentary trusts help assets avoid probate. Assets with listed beneficiaries (life insurance, IRA’s, beneficiary deeds, etc) and assets in a living trust avoid probate.
Guardians: Wills name guardians for children. Living trusts do not name guardians. However, trusts can pre-appoint someone different than the guardian to manage a beneficiary’s assets until they are older and fiscally responsible.
Holding assets: Living trusts can hold assets after a person has passed. A will alone cannot hold assets but a will can create a testamentary trust to hold assets. Common reasons for holding assets include: managing assets for young beneficiaries, protecting special needs beneficiaries receiving disability income, maintaining assets for a spouse in a blended family, and providing care for pets.
Contesting: If someone contests the estate, living trusts are often better equipped to handle the contest.
Transferring Assets to a Living Trust
This step is crucial to a living trust. Without transferring specific assets, those assets may be subject to probate.
To make this structure legal, the state will require filing the property’s deed in the appropriate county records office under the trust’s name using a Quitclaim deed. If the property is not placed in the trust, it will likely go through probate. After signing and notarization, the deed should be sent to the property’s county recorder. If you have property out-of-state, it is often cheaper to call a title company in that state to prepare the deed.
Once your living trust is signed and notarized, take all the documents to the bank. Let them choose the documents they need for information/copies. You’ll sign papers and the process rarely takes more than 15-20 minutes.
Account numbers change? Very rarely. Most federal banks and credit unions let you keep the same account numbers. Direct deposits and automatic withdrawals aren’t interrupted.
Small personal items - you don’t have to list every item
Most trusts include an “assignment of personal property” that covers assets in your home that don’t have a title:
Life insurance - Option: List the trust as a beneficiary
By requesting or downloading a “Change of Beneficiary” form from your insurer, you can list your living trust as a beneficiary so the policy payout is distributed according to the same rules as other assets of your estate. You may wish to consult your financial advisor or attorney in regard to this.
Retirement accounts: 401(k)s, IRAs, etc - Typically left outside trusts
Transferring these accounts from your name to your living trust’s name is akin to cashing out your retirement funds. That’s a huge taxation. So don’t transfer the retirement accounts in your living trust. Since you likely already have beneficiaries listed when you started the account, it’ll avoid probate. Consult your financial advisor and/or attorney before transferring retirement assets to a living trust.