What is the Effect of Divorce on Wills, Trusts and Estates?

The emotional trauma of divorce often leads spouses to overlook important financial issues as well as the long-term effects divorce can have on wills, trusts and estates. States vary on how they deal with an ex-spouse who attempts to collect on an inaccurate will. Arizona, Texas, California and some other states have laws in place which stop an ex-spouse from collecting on a will that is no longer accurate. Other states will simply cross out the name of the ex-spouse and move on to the next beneficiary in line, when the will goes through probate. When a will is dealt with privately, rather than going through probate, there are no guarantees whether the stated provisions will be honored.

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How Living Trusts Avoid Probate

While many people have heard from others that it is a good idea to avoid probate court whenever possible, they may or may not know why they should avoid probate court, as well as how. There are two primary problems associated with probate court. First and foremost, probate can tie the decedent’s property up for months, sometimes as long as a year or more. Probate is expensive; in some states the fees associated with probate can take as much as 5 percent of the value of the estate. Probate essentially involves tons of legal forms, keeping track of all filing deadlines and other procedural technicalities. The executor as well as the attorney will receive fees from the estate, and there can be other costs such as appraiser’s fees and court costs. Given the issues associated with probate, it makes more sense in most cases to attempt to avoid probate completely. This can be done through reducing the amount of property which will be subject to probate, primarily through preparation of a living trust.

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Is a Revocable Living Trust the Same as a Will?

Far too many people are under the mistaken belief that a ​Revocable Living Trust​ and a Will​ are the same thing, and are virtually interchangeable. If you are thinking about estate planning, it is important that you understand the significant differences between a Revocable Living Trust and a Will.

Most people believe that only the very wealthy need to set up a trust or leave a will. This is not only a mistaken belief, but it can lead to serious issues, including having all your assets left to someone you would not want them left to. Even those with very modest estates—a home a car and a little money in the bank, along with personal possessions—can definitely benefit from estate planning.

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5 Things to Know About a Revocable Living Trust (RLT)

Although a will may still be the first choice for many who want to pass their estate to their heirs, it is not the only choice. Among baby boomers, the living trust is fast gaining popularity. The reasons baby boomers are choosing a revocable living trust over a simple will are varied, but the primary reason may be to avoid the probate process. In fact, living trusts offer many before and after-death advantages. Five things you should definitely know about a living trust include the following:

  • What is a living trust, and is it revocable? A living trust is a written document created by an estate planning attorney, which can be funded during your lifetime. A living trust is revocable because so long as you are mentally competent, you are allowed to make changes or even dissolve the trust any time you choose. You reserve the right to amend the trust, revoke the trust, alter the trust or change the trustee however you please. While the trust is the legal owner of it’s assets, the IRS treats you as the owner because you have not given up asset control.
  • Why would I choose a living trust over a will? Both a will and a living trust contain your instructions as to who will get what when you die. The difference is that a will needs to go through a Probate Court process before the contents can be distributed to the intended beneficiaries.
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