The law of trusts and estates is regarded as a body law that governs the disposition of property and management of personal affairs of an individual in any event of death or incapacitated. This law is also known as the law of successions under the civil law. The techniques of this law are also used to execute the wishes of humanitarian bequests or gifts through supervision, maintenance, or creation of charitable trusts.
In some jurisdiction systems, law of trusts and estates can overlap on the area of elderly law that does not only deals with estate planning but also other elderly issues such as disability benefits, social security, long-term care insurance, and home care. Aside from elderly law, law of trusts and estates may also overlap with end of life issues such as a person with terminal conditions. One major factor of law of trusts and estates is the minimized tax exposure. Proper utilization of trusts can reduce tax burden.
Under the common law, the estate comprised of tangible assets of personal and real property that belongs to a natural person. The property of the estate should be transferred through intestacy laws if no bequeathed will existing. A will is the most commonly legal tool used in the distribution of properties of a deceased person. However, before the properties are distributed in accordance to the will, the will should be submitted to a probate court wherein jurisdiction of the estate is required.
Compared to will, probate is a more expensive and relatively lengthy process. This process is often contested by disgruntled members of the family of the deceased person who feel that they have not received fair share of the properties or inheritance. Creditors can also contest to this process.
Probate involves distributing the remainder of the properties according to the will, paying taxes and debts, and appraising & inventorying the properties. To avoid probate upon death, living trust is a recommended solution. Through living trusts, surviving members of the family can easily and quickly transfer the properties. The two most common types of living trusts are AB trust and basic living trust.
To speed up the process of transferring the assets to the intended beneficiaries, some people prefer to arrange their properties before death by bypassing the probate process. For instance, people place their properties under trusts prior to death as trusts often allow the fulfillment of the objectives of property distribution without the process and trial of probate or coming under the jurisdiction of a court. For those beneficiaries who are mentally ill or developmentally disabled, the special needs trusts are created for them. This type of trusts will ensure that they received their inheritances without losing access to the essential benefits of the government.
Wills are inexpensive, simple, and wonderful ways to address the many estate planning needs of people. However, there are certain things that one must not accomplished on a will. Among these things include properties that are under joint tenancy with another party or spouse, properties transferred to a living trust, proceeds of life insurance policies that you have named after a beneficiary, money in a pension plan or retirement account, bonds or stocks held in beneficiary, and money under a payable-on-death bank account.