Money Strategy Systems®
Money Strategy Systems®I guess the first thing to do is explain the difference between a
will and a trust. A will is a legal document
stating how you would like your estate distributed when you no longer need
it, as in deceased. Everyone has something, even if it's a special piece
of jewelry or an old car and some furniture, therefore the need of a will.
Without a will, probate will analyze your assets and distribute them however
they see fit. Do you really want strangers to say who gets what from your
things? A trust is a legal entity that can survive your death and carry
on however you want things to be carried out. A
trust will avoid probate and your kids can have the money before other
people even know your gone. I realize it sounds simple and you can make
these things as complicated as you want, but that's the basic idea and it
does not have to cost more than you can afford. You may also need a Durable Power of Attorney.
A tip for married people: Most of you hold property jointly, which works
well when one of you passes on, however taxes can get out of site if you
have more than a $600,000 estate, and the remaining spouse really needs
to know what to do next. For better financial security you can hold assets
as "tenants in the entirety". When a property is held this way,
creditors of one spouse cannot assert any claim against the property without
the other spouse's agreement. Be sure to get legal assistance for these
documents. And let's not forget the IRS. If your spouse also signs the tax
return, he/she is also libel for any taxes owed!
This can be a hand written note found with your belongings. It should be signed by at least 2 people as witnesses. When there is no will the courts have to use probate to divvy up your things. These are your possessions and why would you want strangers and courts to say who gets what? Usually when there is a spouse involved, all things will go to that person without too much ado, but what if you want your long lost niece to have your Mom's ring or your best friend to have your car? And with a will you can state which of the in-laws gets what, then your kids really get their fair share according to your wishes, not what you hope your spouse will do.
Trusts are like an extension of you and your will. A living will simply tells doctors of your right to die. Whether or not you want to be
A revocable trust means that you can change it at anytime, while an irrevocable trust can never be changed. That's a lot of legal stuff that you would really need a good Trust Attorney for. Let's just talk about revocable trusts that you could establish so that that greedy Uncle Joe or an old ex-spouse can't come and take your belongings and money. The biggest thing a revocable trust does is AVOID PROBATE, which not only saves your heirs waiting time and attorney fees, but avoids probate entirely. This means your kids will already have access to the car and bank accounts by the time your in-laws even find out you are gone!
Yes, you will need an attorney for this, but isn't it better to spend $750 - $1,000 now, than to have your estate or heirs spend a couple thousand going through probate and executors? Don't get me wrong, things could cost a lot more, but I' m concerned with helping the millions of little guys out there who are trying to save their life's work. And later I'll talk about how to keep Mom & Pop's savings from going down the tubes - to strangers, just because you didn't know how to keep it!
Basically this trust is you!! Got that? You still own everything you did before, but when you say, have an accident, or go into a coma, the trust takes effect and someone you trust can temporarily become you. This is because you are the trustee of the trust, which is like President of your own company. You sign the checks and say what is sold or whatever, but the trust is the real owner and never dies. In the trust you have stated who will become you when you can't make these decisions or take action like paying utility bills. This person is called the second trustee and you can have a third and fourth, even 2 people can be the second trustee. You make these decisions and can change them anytime.
One more thing I ought to mention here. Most of you have heard of a Power of Attorney. You probably signed one when you bought your car on time. It's when you let someone sign your name in your absence. Many stock brokers use them so they can buy and sell your stock without you going there for a simple signature.
Now my point is that there is a legal document called a Durable Power of Attorney. This gives someone (or several) person(s) the ability to sign your name. If you have someone you truly trust, you can appoint them to handle your affairs only when necessary. An attorney does need to make this document for you because you may need it made for specific things, for real estate handling and/or stock and bank accounts. Many parents give their children Power of Attorney, but a Durable Power of Attorney also goes into effect when you have a stroke or accident unexpectedly. Actually it should be part or your trust statement. At about $150 this can be simpler to obtain that a revocable trust, and quicker too.
This topic can go on and on and the details can always be more explicit,
I just want people to be aware of things they can do to help in this confusing
world. If one understands the basics of anything, then others can not take
advantage of them. I have always found that "Knowledge is Power"
and to always ask questions. The best way I have found to find a good accountant
is to simply ask him, "How much do YOU pay in income taxes". If
he can't or won't tell you, move on fast! If he pays in a low tax bracket
(15%), then he does know what he's doing and can save you a lot of money
too. Unfortunately I can't figure out how to spot a good attorney, but he
should know a lot about the things I've described, or he's not worth his
fee. By the way many good attorneys and accountants will give you a consultation
at no cost (That's free advice).
I am happy to answer a specific question through my e-mail. My accounting,
insurance, real estate and financial planning background have given me a
wide range of knowledge.
Any opinions on this site are strictly my own. Actual fees come from Print Monitor
Reports published weekly in North Palm Beach, Florida. I would be happy to answer
personal questions via e-mail at: therose@moneystrategysolutions.com
If I have saved you one dollar today, I am thankful. Have faith in yourself,
go for your dreams, Rosie
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