Lisa Graetz Law  


What is the difference between a will and a trust ?

A will takes effect only at death. Once you die the person who you choose to handle your will (the Executor) will carry out the instructions you set forth in your will, for example where you want your possessions/money/home, car, etc. to go.

A trust takes effect once it is created and assets are transferred into it. Should you become incapacitated, the trustee (the person you choose to manage the trust when you can’t) can step in and pay bills, run businesses, manage assets etc., on your behalf until you are back on your feet again. When you die, this person will carry out the instructions you set forth in the trust regarding management of the assets and distribution of assets and money.

Why do I need a trust when “I don’t have anything?”
Most of us don’t realize that a house, life insurance, assets, and bank accounts add up to quite a bit, and in fact, is a lot of “something.” With the changing tax laws, it is practical tax planning to use the tax shelters to keep the government from taking your hard earned money and assets versus leaving it to someone or some thing that you care about.

If you have a life insurance policy it can be left to the trust and distributed the way you choose. For instance, if you have children, when they turn 18, they will get ALL the money they are entitled to if they are the beneficiary (the person you select to receive the life insurance money). Not many kids at 18 are mature or wise enough to handle a large amount of money.

The alternative is to leave the money to the trust, with explicit instructions to the trustee on how and when to distribute the money. For example, money can be held in the trust and used for the education, health and welfare of your child until all the remaining money is distributed to them at the age decided by you.

The trustee could be authorized to pay for your child’s college tuition, housing, books and/or medical expenses from the trust before the age of final distribution. The trustee could also be authorized to distribute money for the purchase of a new home, or to start a business etc., before the age the money is authorized to be distributed. Meanwhile the money remaining in the trust is being invested, earning interest, and growing. This allows you full control of when the money goes to your children and for what purpose.

Unlike a Durable Power Attorney for finances (see below), there is no battle with the institution should you need to have the trustee step in and manage your finances if you are incapacitated. Your bank accounts and assets etc. are already in the trust, in the name of the trust. This allows the trustee to step right in, with little or no difficulty and immediately begin taking care of your business.

I don’t have anyone to leave anything to, why do I need a will or a trust?
The county where you die will end up administering your estate when you expire. The officers of the court who are assigned to manage your estate will attempt to find your distant relatives and when found, divide the estate according to that particular state’s law of inheritance. A large portion of the estate will go to pay the court officers to handle this and the remainder will go to the long lost relatives you either didn’t know or didn’t like. If no one is found, the money goes to the state after the officers of the court are paid.

Wouldn’t you rather have a good friend(s) or your favorite charity get your money and/or assets?

What is an Advanced Health Care Directive?
An advanced health care directive provides instruction to your loved ones for end of life decisions. This not only makes a stressful time a bit easier but prevents unnecessary prolongation of your life under conditions that you don’t want. The advanced health care becomes active when you are unable to make decisions for yourself. For example, you can provide instructions as to whether or not you want your life prolonged by artificial means and under what conditions. You can also provide instruction as to whether you want your organs donated or not and if so for what purpose.

What does “Estate Planning” mean?
Estate Planning simply means to plan out what you want done with your assets when you die. There are a multitude of things that can be done with proper estate planning, such as taking advantage of the current tax law and tax breaks to lessen your taxes paid to the State and Federal Government upon your death. You will have control of how the money/assets are distributed to ensure your children don’t squander away their inheritance, ensure your pets are taken care of in the manner you choose (and they are accustomed to) once you die. It is often assumed that family members will take on the responsibility of the pets, frequently however, your beloved and loyal companion ends up in a shelter, un-adopted and often times euthanized.

What constitutes an Estate?
Everything you own. Anything you are making payments on, have in retirement, have in the bank, or any business you own, any life insurance policy, stocks, bonds, real estate, and all your “stuff” are part of your estate. What is a Durable Power of Attorney? (D.P.A.)

A durable power of attorney gives the person you designate the authority to manage your finances if you are incapacitated or unable to do so. Banks and other institutions are reluctant to allow the person you designate to easily step in and take over for you. They often require much more than the (DPA) document since it is their duty to protect assets and shield their institution from liability if they allow the “wrong” person to take control. Having a trust in place will negate this problem.

What is a “Pet Trust” and why do I need one?
A pet trust allows you the opportunity to designate a caregiver for your pet(s) and fund their care if you die before your faithful pet. As mentioned above, pets are often overlooked when a loved one dies. It is often assumed that family will take care of them. Sadly, this is not the norm. Not everyone is going to care for your pet(s) the way you did. With a designated caregiver, you can provide detailed instructions on how your pet(s) will live their lives without you; from the food and treats they’ll eat, where they will sleep, and the type of western/eastern medical care they will receive etc.

I’m interested in a Trust, what information do I need to gather?

  • A general idea of how large your estate is
  • The value of your home(s)
  • Life insurance policies
  • Estimates of what is in your bank accounts and your retirement accounts
  • If you own a business, how much it is worth
  • Any other significant assets such as cars or boats
  • A couple choices of whom you would like to manage your Trust, whom you want to be your agent, as well as alternates for your Advanced Healthcare Directive (those who will carry out your instructions regarding your end of life decisions.)
  • A general idea as to who you want your ‘stuff’ to go to

I’ll need to have an idea of the size (worth) of your estate to address any tax issues that may arise. I will send you a work sheet to fill out that will help you through the process.

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Lisa Graetz and her dogs