A Last Will and Testament is a document in which an individual sets out his or her preferences for how his or her property should be distributed once the person who creates the will (known as the testator) has died. Wills tend to be the estate planning tools with which individuals who have not yet prepared estate plans of their own have the greatest familiarity, in large part because wills have had a significant cultural presence for many generations. Trusts often operate alongside Wills.
In some cases, but not all, Trusts may perform goals similar to those of a Will. Trusts are more flexible and customizable than wills, and unlike wills, some types of trusts can have their provisions implemented even during the lifetime of the grantor or settlor (the individual who sets up the trust and places assets in it). The complexity of the estate plan you may need will depend on the nature of your assets and goals, but often our Missouri and Kansas estate planning lawyers at The Binder Firm recommend considering some combination of a will and one or more trusts to ensure that a client’s estate plan is tailored to their liking.
If you have never created a will, it is never too soon to begin. Almost every American adult should have a will in place, even if they expect to live many more years, and in all likelihood, over the course of decades, may change the terms set out in the will many times. Even though it is a “Last Will and Testament,” the goal of creating a will is not to decide in one document what you will always want to happen to your property, no matter how your circumstances change or the length of time you expect to have left.
Rather, a will is meant to be “last” in that the terms you place in a Missouri and Kansas will will be the last thing you said on the subject prior to your death. In other words, “last” should be understood not from the perspective of the testator, approaching the document with a sense of finality and no expectation of ever making changes, but rather from the perspective of the friends and family left behind, reviewing the “last word” from their loved one on the matter of how their estate should be handled.
The specific provisions an individual wishes to place in his or her will vary greatly from one person to another. Generally, however, the structure of a will takes shape something like this:
Some testators prefer to leave their property to be divided in shares; for instance, “evenly divided among my three children.” This strategy can work well when all of the assets in question are readily divisible; financial accounts are a notable example of this type. When the assets are more difficult to split into portions without diminishing the value of the whole, as is often the case with real estate and even with some business interests, the “equal shares” strategy may not be the optimal approach.
The situationally-specific nuances of property disposition are among the reasons why we at The Binder Firm like to encourage Missouri and Kansas residents planning their wills to schedule a private consultation with an estate planning attorney. Preparing an estate plan that will not only pass legal muster, but actually yield the desired results in terms of diminishing stress on loved ones and leaving them genuine gifts in place of burdens, is such a personalized endeavor that broad suggestions found online may come in a distant and potentially frustrating second to hands-on assistance from an experienced attorney familiar with a range of estate planning tools and how to maximize their potential under Missouri or Kansas probate law.
A trust is an estate planning and asset management tool that allows individuals (or entities) to:
Sometimes the trusteeship may come with an expectation that the trustee will manage trust assets so as to increase their value over time, by appreciation (as with art or collectibles), “improvements” (common with real property), or interest (typical for assets that are primarily financial in nature; this category may include not just banking accounts that generate interest on the funds they contain, but certain types of readily liquidated assets such as investment stocks). In other instances, the trustee’s obligations will be limited to making sure that the assets held in the trust are properly distributed to the designated beneficiaries at the appropriate time.
In either case, these requirements will be set out in the trust instrument (the document used to create a trust). One of the most valuable aspects of trusts as estate planning tools is that, when properly written and executed, they can be extremely effective at eliminating any ambiguity concerning how the property placed in trust should be handled.
Trusts are so valuable in part because they are such flexible and customizable tools, so there are many different ways an individual might make use of a trust in a Missouri or Kansas estate plan. The intended function of the trust will often dictate which type of trust is most appropriate.
A few of the types of trusts we often create for our estate planning clients include:
One of the main distinctions between the various types of trusts is whether each is revocable, meaning its terms can be changed by the grantor during his or her lifetime, or irrevocable, meaning that the terms set out in the trust instrument cannot be changed (or “revoked”) once the trust has been properly executed in accordance with Missouri or Kansas law.
Any trust becomes irrevocable upon the death of the grantor. However, a few types of trusts are always irrevocable. An asset protection trust must be irrevocable from the outset in order to function as intended, while a testamentary trust executed under Mo. Rev. Stat. § 456.029 is inherently irrevocable because it is created by the grantor’s will. A testator may alter the terms of his or her will to make adjustments to the terms of a testamentary trust, but the testamentary trust itself is not effective until after the individual’s death.
Preparing an estate plan that effectively integrates tools like wills and trusts so that they work together as a cohesive whole can be a surprisingly complicated undertaking. Although the degree of complexity depends to some extent on the nature of an individual’s assets and the way they would like them to be disposed of, at The Binder Firm, we usually encourage clients to at least consult with an estate planning attorney prior to executing important estate planning documents. Many people will also benefit from updating their estate plans periodically; every three to five years or after any major events (such as a family birth, death, marriage, or divorce) is not an absolute rule, but tends to work well as a general guide. For all your questions concerning wills and trusts, we hope that you will feel welcome to contact our Kansas City office.