Although a comprehensive estate plan may ultimately include a wide variety of estate planning tools and strategies, two of the most basic tools are a Last Will and Testament and a trust agreement. If you are new to estate planning, learning more about wills and trusts is a good place to start because you will likely use either a will or a trust as the foundation for your estate plan.
At Sterling & Tucker, LLP we understand that getting started on your estate plan can be a bit overwhelming. Our wills and trusts attorneys are committed to helping you create an estate plan that reflects your needs and wishes.
What You Need to Know about a Last Will and Testament
A Last Will and Testament is a legal document that allows you to make decisions relating to the disposition of your estate assets upon your death. For a Will to be valid in Hawaii, the Testator must be 18 years old and of sound mind. In addition, the Will must be in writing, signed by the Testator or by someone at his/her direction, and must be witnessed by two witnesses. Within your Will, you may make specific or general gifts. For example, you might leave your daughter a specific bequest of your jewelry or you might leave her a general bequest of one-half of your estate assets.
If you fail to execute a Will (or trust) prior to your death you will leave behind an “intestate” estate and the intestate succession laws of the State of Hawaii will determine what happens to your estate assets. Typically, that means that only a spouse or very close relatives will inherit from your estate. Close friends, a favorite niece or nephew, and that charity that means so much to you will receive nothing from your estate if you die intestate.
Along with deciding how your estate will be distributed, executing a Will provides you with the ability to make two other important decisions. The first is the appointment of a Personal Representative to oversee the probate of your estate. The second is your only officially recognized opportunity to nominate a Guardian for any minor children you may have in case one is needed at the time of your death.
Trust Agreement Basics
A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor (also referred to as a Maker or Grantor), who transfers property to a Trustee. The Trustee holds that property for the trust’s beneficiaries. A trust is a very popular addition to the average estate plan, in part because of the numerous and varied estate planning goals that can be achieved using a trust, including:
- Probate avoidance – probate can be a very costly process, both in terms of the actual money spent and in terms of the time beneficiaries must wait for their gifts to be distributed. Furthermore, the terms of your Will become public record when the Will is filed. One way to avoid these negative issues to use a trust as your primary estate planning distribution tool because assets held in a trust bypass the probate process altogether.
- Incapacity planning – a revocable living trust lets you appoint yourself as the Trustee and someone you trust as the successor Trustee. Assets are then moved into the trust for you to manage as long as you are capable. If incapacity strikes at some point in time, control of the trust assets automatically shifts to your designated successor.
- Asset protection — you might establish an irrevocable living trust to protect assets from creditors and other threats. Because assets transferred into the trust become trust property, they are no longer accessible to known and unknown threats.
The Honolulu Wills and Trusts attorneys at Sterling & Tucker, LLP would be honored to help you get started with your estate plan by helping you create a Last Will and Testament and/or a trust agreement. Contact the team today by calling (808) 531-5391 or by filling out our online contact form.