Real estate and estate planning is an important aspect of family law. Knowing the basics of wills, trusts, and a power of attorney is vital for individuals that are looking to protect their assets, and to have control over their assets, as well as how they will be distributed. In this essay, I would like to go into detail regarding wills, trusts, and a power of attorney. Explaining the purpose behind each, along with the benefits of each. I would also like to describe how all of these will work together.
A will is a legal document that will outline the individual’s wishes. Usually regarding how their assets will be divided after death. When it comes to how this relates to real estate, a will makes sure and allows the property owner, or the testator, to specify who will inherit the property assets and how it should be divided. This will prevent future disputes in the long run. If the testator has children that are minors, a will can specify and designate a specific guardian in this situation to care for the children and the real estate assets on their behalf, until they are old enough to make decisions about the property. It is also important to note that a will typically goes through the probate process. This process can be time consuming and costly. During this process, the court will validate the will, making sure to pay particular attention on how the assets will be distributed.
A trust is a legal relationship that will hold on to assets for the beneficiary or beneficiaries. When it comes to how this relates to real estate, a trust will allow the property owner, or the grantor, to transfer ownership of their real estate assets to the trust. Unlike a will, assets in a trust will typically bypass the probate process. This will make sure that the distribution of assets are given out a lot faster. A trust will allow the grantor to provide specific details on their assets, and how they want them managed. This can be crucial, especially if the grantor wants to have more control over the timing and conditions of their assets. Other types of trusts, such as revocable trusts, will be able to offer more flexibility which can also allow the grantor to modify or even revoke the trust during their lifetime.
There are 3 types of trusts an individual can consider. Each trust will serve a different purpose, and offer distinct benefits for the individual looking to protect their assets. A revocable trust, also known as living trust, is an arrangement that allows the grantor to have control over their assets during their lifetime. The grantor will be able to modify or revoke the trust at any time if they choose to. The main advantage of a revocable trust is it will include probate avoidance, meaning the assets in a revocable trust don’t have to go through the probate process, which will save a lot of time and money. Unlike revocable trusts, irrevocable trusts will not be able to be modified or revoked once they are established. Once the assets are put into an irrevocable trust, it is no longer considered the property of the grantor. This type is usually used for estate planning, asset protection, and tax planning. A testamentary trust is created through a person’s will, and can only go into effect upon their death. This trust will make sure the grantor is able to make decisions on how their assets will be managed. This type of trust is usually used to provide for younger children, individuals with special needs, or individuals who may have trouble handling their own affairs. This trust can specify when and how their assets will be distributed, providing ongoing financial support even after the grantor’s death.
Lastly, I will be explaining a power of attorney. This is a legal document that will authorize an individual to make decisions on someone else’s behalf. This can be broad or limited, depending on what is needed for the individual (financial decisions or medical decisions). The person giving this power, which is also known as the “principal”, can choose the specific powers and limitations for the appointed person. This often comes into place when the principal is unable to make decisions due to an illness they may have. So, putting this in place will make sure that their affairs are taken care of by a trusted individual.
Understanding the basics of wills, trusts, and a power of attorney is crucial for individuals looking to protect their assets and will put strict rules on their real estate. A will allows the individual to specify what they would like to happen to their property after their death. Ensuring it is a smooth process for everyone that will be involved. However, a trust will provide the grantor with the power to transfer their real estate and assets to the trust, without having to go through the probate process. The grantor also has a little more control, since they are able to modify the assets being given. Lastly, a power of attorney will grant the individual the authority to make any decisions on behalf of someone else, providing support and helping them manage their affairs. Understanding these will ensure that the individual’s assets are secured and their wishes will be carried out after their death.
Thank you to the estate planning lawyers at Brandy Austin Law Firm for the above blog.
