1) Do I need a Will?
Most likely, yes. Anyone who has minor children should have a will to appoint a Guardian in the event of both parents dying while the children are minors. Anyone who wishes to distribute her estate in an alternative manner to the intestate laws prescribed by the state of residence must have a will.
2) What is intestate?
A person who dies without a will, dies intestate. Under these circumstances, the laws of intestacy as prescribed by the state of residence will govern the disposition of the estate.
3) Can I avoid probate if I have a will?
No. Probate is the process of validating a will. In order for a will to be valid and have force and effect, a probate judge must approve the will in court and appoint an executor who will handle the estate.
4) If I die with minor children, who will handle my money for them?
If you have minor children, a trust should be established for the time period until they reach the age of majority or another age selected by the testator. You, the testator, would also appoint a trustee to handle the assets of the trust for the benefit of your minor children until such time as the corpus of the trust is to be given to the children.
5) Can I appoint the same person as executor, trustee and guardian?
Yes. The same person can fulfill all of these duties, but it need not be the same person. For practical reasons, having the same person as guardian and trustee simplifies matters. However, if one person is great with children but poor with finances, it may make sense to split the duties.
6) How can I avoid the probate process?
A person’s estate will not need to be probated if the person did not have assets in her name alone at the time of death. Therefore, one way to avoid probate is to own all of your assets jointly with another. The better approach is to create a living trust.
7) What is a trust?
A trust is a separate entity which has its own legal existence apart from the settlor or grantor of the trust. The assets in the trust are governed by the trustee or trustees of the trust which can be the same person or persons who created the trust. One benefit of the trust is that it does not need to be probated in order to be valid and effective. It works without court administration or supervision. This saves the time and expense of the probate process, but trusts are more expensive to draft and put into effect than a will.
8) What other benefits are there for creating a trust?
The creator of the trust has the freedom to include any trust provisions they desire. This flexibility allows for the unique situation to be handled in a precise and delicate manner. For example, a spendthrift child can be controlled, or an inflicted or disabled child can have detailed provisions for their care and maintenance.
There are also special trusts to be utilized for tax planning purposes if the estate is taxable either federally or at the state level. In 2006 and 2007 the limits are $675,000 in Rhode Island and $2 million federally. These limits are adjusted for inflation in the coming years. Please contact our office if you believe you may have a taxable estate.