Frequently asked questions about Estate Planning
What is estate planning?
The term “estate” refers to all of the assets you own. This includes property, money, personal belongings, and sometimes business interests. When you create an estate plan, you are developing a plan to manage your assets if you become incapacitated while you are alive and a plan to distribute your assets after your death. An estate plan also gives directions for the care of any minor children you may have.
Powers of attorney for finances and healthcare and a medical release are a part of many estate plans to be used when you are still alive.
What is a will?
A will is a legal document that explains how you want your property distributed after your death. A will also identifies guardians for any children you may have under 18 years old or adult children who are disabled. A will typically goes through the probate process, which requires court involvement.
What is a trust?
Generally, when an individual or married couple create a trust, they are both the Grantor(s) and the initial Trustee(s), of the trust. They transfer their assets, such as property and bank accounts, into the trust, and then use those assets for their own benefit while they are alive.
If the initial Trustees become incapacitated, the successor Trustee(s) step in to manage the assets for the benefit of the initial Trustee(s). Once all of the initial trustee(s) have died, the successor Trustee(s) distribute the assets to individuals or charities named in the trust.
A trust does not go through the probate process unless assets have been left outside of the trust after the last Grantor has died.
It is also possible to set up a trust for loved ones who have special needs. This type of trust is called a Supplemental Needs Trust, or 3rd Party Trust. With this type of trust, Grantor(s) put assets into the trust for the benefit of a person with special needs who needs access to government benefits.
How is a will different than a trust?
In the simplest terms, a will leaves your assets in your name while you are alive and gives instructions on how to distribute those assets upon your death, while a trust moves your assets into the name of the trust while you are alive and gives instructions on how those assets are to be used or distributed when you are incapacitated or after you die. A will typically requires probate, while a trust may not. A will names a personal representative to handle your estate after you die, while a trust names a successor trustee for when you are incapacitated or after you die.
How do I know who to pick to be my personal representative or successor trustee?
When selecting a personal representative or successor trustee, it is important to identify an individual or organization who is able to work with your family members and the named beneficiaries of your estate. Consider someone who has the time and ability to contact financial institutions, handle paperwork, and manage the details of your estate.
It is important to know that a personal representative only handles your estate after you die, but a successor trustee may handle your estate if you become incapacitated while you are still alive.
What happens in Idaho if I don’t have a will or trust?
If you do not have a will (or trust) in place when you die, the State of Idaho has laws that govern how your assets will be divided. This process is called intestate succession. If you are interested, these statutes can be found in Idaho Code, Title 15, Chapter 2. It is important to remember that if you want your estate distributed differently than outlined in the intestate succession statutes, you must have a will or trust in place before you become incapacitated or die.