Wills and Trusts can make sure your assets go where you want after you pass.

Financial planning for your future and your family are among the most important steps a person can take to ensure that assets acquired over a lifetime are used in the best possible manner.

Financial planning can take many paths during a lifetime. However, if not handled properly, those assets may not be available to family members and other heirs after your death.

The two tools that will prove to be the most helpful in assuring that assets are handled properly and according to your wishes, are wills and trusts.

To understand the difference between the two instruments, it may perhaps be helpful to examine the differences through a will and trust outline.

By looking at each document separately, the major points are explained, but should not be viewed as legal advice. The information offered here can be looked upon as a suggestion to obtain legal advice.

Before going any further, it should be noted that laws dealing with wills and trusts vary among the different states. Thus, wills and trust agreements need to be frequently reviewed. This is needed to address any changes in the family dynamics.

Start With The Will

Every adult should have a will. While some people with limited assets may not agree, they still need to have a will. They could obtain additional assets, inherit from someone else or even with the lottery. It is impossible to predict when and how your financial picture may change.

Why Have A Will

-It is also impossible to predict when death occurs. Thus preparing a will is an important task.

-A will can offer some degree of security as to who is to received certain keepsakes or if any items should be donated to charity.

-The common or traditional will involves how assets are to be divided at the time of your death. There are several technical terms involving married couples such as surviving spouse, community property, and other issues, which are best explained by an attorney.

-In the case of a married couple, both the husband and wife should have their own wills. They can be identical, or each one can have variances, depending on the marital situation such as former marriages, and children from those marriages.

-As your assets change and children grow, spouses die or divorce, the wills must be updated. The simple fact is that the drafting of a will is not a one-time process. A will that is locked in a safety deposit box or stuffed into the family file cabinet could prove to be a problem instead of an asset if not kept up to date.

-Each will should name an executor, often a family member, or a lawyer. This person will be responsible for ensuring that the provisions of the will are followed.

When preparing a will, it is also advisable, but not required, to have a living will. Such a document lets the person make known what life-saving measures should be taken in the event the person is facing a near-death or incurable situation. Furthermore, a durable power-of-attorney can be drafted that would allow the spouse to make those decisions, if the spouse is unable to indicate his or her desires regarding medical treatment.

Although life insurance is not a direct part of the will, the benefits of the policy should be considered. A husband may have a $100,000 life insurance policy that his wife collects upon his death. If the wife dies first, the beneficiary has to be changed. Otherwise, when the husband dies and the wife is already deceased, the insurance benefit may be divided among other survivors. Secondary survivors can be identified in most life insurance policies.

There are many other issues associated with wills and survivors, which can be explained by an attorney. It is possible that the help of a financial planning specialist will be needed, depending on the size of the estate.

Trusts Also Have Many Faces

There are several types of trust. Usually, the most common is a basic trust fund, where an amount of money or assets are held in trust and are to be made available at certain intervals of time to the designated person or persons.

Types of Trusts

-Other trusts are established to provide long-term care for people. A parent who has a child with a condition that will prevent the child from living independently, may start a trust for the child. The parent can contribute to it annually with instructions that the designated administrator will use the funds to provide for the care, health and comfort of the child regardless of his physical age.

-Still other trust funds can be established so that a trustee, such as a bank officer, is responsible for paying all routine bills from the trust for a person who is capable of living along with minimal assistance.

-In addition, the trust officer will have the authority to issue a weekly or monthly allowance to the individual and assume other financial tasks. Usually, large banks will have a trust department.

In this case, a lawyer specializing in trust and wills and a financial adviser would be consulted. This is needed to make certain that the amount bequeathed to the beneficiary of the trust will have an adequate source of income and assistance with handling basic household business issues.

As it has been noted several times, establishing a will or trust is something that requires considerable thought and addresses all the details that are relevant. An individual can make a list about who gets which chair, the family dinnerware, tools and other similar items.

However, when it comes to assets such as the home, IRA savings, stock holdings, amounts in the checking account and any other investments, then it is necessary to have professional advice.

Preparing a proper will or trust is not a task that can be completed in a 30-minute visit to a lawyer. Many questions regarding the individual desires, his/her financial situation, assets and obligations will have to be discussed.

However, failure to take these steps can lead to disagreement among the heirs, unintended use of the assets and other issues. Thus, preparing a proper will and establishing trusts, if needed, will require professional assistance.