Having an estate plan is important to ensure that all of your assets are distributed in accordance with your instructions and designate a person to carry out your instructions. Putting a formal estate plan in place is does contemplate the morbid thoughts of your demise, but identifying your goals will ultimately give you peace. A complete estate plan will usually include the following documents; a Last Will & Testament, Healthcare Power of Attorney, Financial Power of Attorney and a Living Will.
Below are some FAQ’s about preparing an estate plan.
Do I need to be wealthy to have an Estate plan?
No! All individuals should create an Estate plan that expresses their wishes as to how they want their assets distributed at the time of their death.
More importantly if you have minor children, you can take the opportunity to appoint a guardian to care for said children, should the need arise. This tends to be the most difficult decision but if you do not make an appointment, then the court will have to decide.
Probate administration with a will is a much easier and less expensive undertaking, because the court intervention is minimized.
What happens to my assets if I don't have an Estate plan?
If a person passes away without a Will, then Rhode Island intestacy laws will determine how the assets are distributed. Intestacy laws follow blood lineage, so generally speaking the assets are disbursed to children first, or to parents. Spouses may elect to have a percentage, however since they are not blood lineage, they are not part of the intestacy provisions.
Further, the court will appoint an Administrator to carry out all of the administrative tasks as approved by the court in distributing the estate.
What is the difference between a Will and a Trust?
A will is a set of directions disclosing how a person wants their assets distributed upon their death. A Will is a revocable document that is not effective until death.
These instructions need to be submitted, approved and administered in accordance with the Probate Court and laws of the State. All of the documents filed in the Probate court become public record, and creditors of the deceased person must be notified of the probate process. The probate process in Rhode Island takes a minimum of 6 months to complete.
A Trust is an asset management tool that is created during a person’s lifetime, the created of the Trust is known as the Settlor. The Agreement is structured to manage the Trust assets during the Settlor’s lifetime with a disbursement plan upon their death. A Trust is effective as of the date it is created and may be revocable or irrevocable. In order for a Trust to be effective, assets must be transferred into the name of the Trust, immediately after the Trust is created. The process of re-titling assets can take time and cost money, as everything including real estate holdings, bank accounts, insurance proceeds, etc, will need to be transferred to the Trust. Various types of trust can be created depending on the client’s individual needs and goals. Usually Trust assets are disbursed in accordance with the Trust Agreement. The assets are conveyed as a contractual transfer therefore allowing families to avoid Probate court, most of the time. This eliminates public knowledge for the decedent’s financial circumstances.