For most people, a comprehensive estate plan includes numerous legal documents and various ancillary documents. Which of these is the most important estate planning document? For most people a Last Will and Testament provides the foundation on which their estate plan is built; however, a trust agreement may eventually be just as important. The Indianapolis estate planning attorneys at Frank & Kraft explain which document is the most important one in your estate plan.
Your Last Will and Testament
Your Last Will and Testament is where everything begins in an estate plan. In fact, your initial estate plan, created when you are young, unmarried, and without children, may consist of nothing more than a Will. Your Will can accomplish the distribution of your entire estate upon your death; although, most people choose to add other documents to their estate plan as they mature that also impact the distribution of estate assets. A simple Will can gift specific items to beneficiaries or can direct a broad distribution of estate assets. For example, your Will might specifically gift your baseball card collection to your nephew, or it might gift 25 percent of all estate assets to your nephew. Either way, your Will can provide for the distribution of your entire estate.
The ability to make specific bequests, however, is one of the most important benefits of creating a Will. In the absence of a Will, your estate assets will be distributed according to the intestate succession laws of your state of residence at the time of your death. Those laws require your estate to be divided among survivors according to percentages. Often, this means that estate assets are sold, and the proceeds are used to create the required distribution. Family heirlooms and sentimental assets that were meant for specific people will likely be sold right along with all your other estate assets.
The other role your Will can play is to allow you to nominate a guardian for a minor child. If you have sole legal and physical custody of a child, the child’s other parent is deceased or you and the child’s other parent die simultaneously, a legal guardian will need to be appointed for your child. The only opportunity you have to let the court know who you wish to be your child’s guardian is in your Will.
Why Might a Living Will Be the Most Important Document?
Both a Will and a living trust can be used effectively to distribute your estate assets; however, as their estate grows, many people choose to rely primarily on a living trust to distribute their assets. Three benefits to using a living trust as your primary distribution method include:
- A living trust helps your estate avoid probate. Unlike assets distributed by a Will, trust assets bypass the probate process entirely because a trust does not have to be submitted for probate.
- A living trust allows you to maintain some control over the assets you gift. When you use a living trust to distribute assets you can also use the provisions of the trust to maintain a certain degree of control over the assets you gift.
- A living trust can protect the inheritance of a minor child. A minor child cannot inherit directly from your estate. As such, any assets gifted to a minor child in your Will must be held and managed by an adult until your child reaches the age of majority. Therefore, a trust is a better option to guard your child’s inheritance because it is set up with a Trustee whose job is to do just that – manage trust assets.
Contact Indianapolis Estate Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding estate planning, contact the experienced Indianapolis estate planning attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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