Estate Planning 101: Common Questions Answered
Estate planning is the process of creating a plan for how your assets and affairs will be handled after your death or incapacity. It can help you protect your loved ones, avoid unnecessary taxes and fees, and ensure that your wishes are respected. In this article, we will answer some of the most common questions that people have about estate planning in Washington state.
Q: What is the difference between a trust and a will?
A: A will is a legal document that spells out how you want your affairs handled and your assets distributed after you die. A trust is a fiduciary arrangement whereby a grantor (also called a trustor) transfers property to a trustee, who manages it for the benefit of one or more beneficiaries. A trust can be created during your lifetime (a living trust) or after your death (a testamentary trust).
Q: Do you recommend a trust or a will?
A: We recommend both a trust and a will for a comprehensive estate plan. A will serves as a safety net for property not already directed to the trust, naming guardians for your children, revoking prior wills, and appointing an executor, also called a personal representative. A trust, on the other hand, collects assets from all sources for consistent administration and distribution, providing flexibility and control over your estate. By combining both elements, you can create a well-rounded estate plan that addresses all aspects of your family’s needs and preferences.
Q: What is a beneficiary?
A: A beneficiary is someone who receives something from your estate, either through your will or your trust. You can name anyone as a beneficiary, such as family members, friends, charities, or organizations. You can also specify how much each beneficiary should receive and under what conditions.
Q: What is a fiduciary?
A: A fiduciary is an individual or entity that has a legal duty to act in the best interest of another party and carry out their wishes with the utmost loyalty, care, and responsibility. There are different types of fiduciaries involved in estate planning, such as executors, trustees, guardians or conservators, agents, and personal representatives.
Q: What is the difference between an executor, personal representative, and trustee?
A: An executor and personal representative essentially serve the same role, with both being responsible for administering a person’s will after their death. They ensure the deceased’s wishes are carried out and their assets are distributed according to the will. A trustee, on the other hand, manages the assets in a trust for the benefit of the beneficiaries. The trustee follows the guidelines set forth in the trust document and ensures the proper distribution and management of the trust assets.
Q: What is the difference between a guardian and a conservator?
A: A guardian is responsible for taking care of minor children or incapacitated adults when the primary caregiver dies or becomes unable to do so. This includes making decisions related to the physical and emotional well-being of the person under their care. A conservator, on the other hand, is appointed to manage the financial affairs of a minor or incapacitated adult, ensuring their financial resources are used responsibly and in their best interest.
Q: How should I choose who serves as a fiduciary?
A: You should choose someone who is trustworthy, reliable, and willing to serve as a fiduciary. You should also consider their skills, abilities, and relationship with you. For example, you may want to choose someone who is good at managing money for an executor or a trustee role; someone who shares your values and beliefs for a guardian or an agent role; someone who lives nearby or has easy access to your estate for a personal representative role. You should also communicate with them about your expectations and wishes before naming them as a fiduciary.
Q: Do I need to choose the same people for all the fiduciary roles?
A: No, you do not. A fiduciary is someone who has a legal duty to act in your best interest and carry out your wishes. There are different types of fiduciaries involved in estate planning, such as executors, trustees, guardians, agents, and personal representatives. You can choose different people for different roles, depending on their skills, abilities, and relationship with you. However, you should make sure that they are trustworthy, reliable, and willing to serve.
Q: Can I name my minor child as a fiduciary?
A: No, you cannot. A fiduciary must be at least 18 years old and legally competent to serve as such. If you want to name your minor child as a beneficiary of your estate, you should create a trust for their benefit and appoint a trustee to manage it until they reach a certain age or meet certain conditions.
Q: How can I take care of my pet after my death?
A: If you have a pet that you want to provide for after your death, one option to consider is a pet trust. A pet trust is a legal document that allows you to name a trustee who will manage the funds and care for your pet according to your instructions. You can also name a beneficiary who will receive any remaining funds after your pet’s death. A pet trust can give you peace of mind that your furry friend will be well taken care of when you are gone.
Q: Can a charity be a beneficiary of my trust?
A: Yes, you can leave a portion or all of your trust assets to a charity of your choice. This can be a great way to support a cause that you care about and reduce your estate tax liability. You can specify how the charity should use the funds, or leave it to their discretion. You can also change or revoke your charitable gift at any time during your lifetime.
Q: Why should I try to avoid probate?
A: While probate is more efficient in some states, you may still want to avoid it for reasons such as time, privacy, control, and ease of administration. By creating a trust, you can protect your estate and ensure that your assets are distributed quickly, privately, and according to your wishes.
Q: Why is it important to add the deed to my house to my trust?
A: If you own a house or any other real estate property, you should transfer the deed to your trust. This way, the property will be owned by the trust and not by you personally. This will allow the property to pass to your beneficiaries without going through probate. To transfer the deed to your trust, you will need to prepare and record a new deed with the county recorder’s office.
We hope this article has answered some of your questions about estate planning in Washington state. If you have more questions or need help with creating or updating your estate plan, please contact our firm today. We are experienced and compassionate estate planning attorneys who can help you achieve your goals and protect your legacy.