Wills and Trusts Frequently Asked Questions
WHAT IS A GUARDIAN? This is the person who will have the responsibility to care for your child if you and your child’s other parent are unable to provided care due to death, before the child reaches 18 years of age.
WHAT IS AN EXECUTOR? This person or institution, of your choice, named in your will and appointed by the probate court, that collects and manages your assets, pays your debts and expenses and any taxes that might be due, and then, in a manner approved by the court, distributes your assets to your beneficiaries in accordance with the provisions of your will. You should choose your executor carefully. The executor cannot be a minor, a person subject to a conservatorship or otherwise incapable of performing the duties of personal representative. It’s generally preferable to name the same person as the executor and the trustee or successor trustee.
WHAT IS A LIVING TRUST? A revocable living trust, sometimes referred to as a revocable inter vivos trust, or a grantor trust. A living trust may be amended or revoked by the person creating it (commonly known as a “trustor,” “grantor” or “settlor”), at any time during the trustor’s lifetime, as long as the trustor is competent.
A trust is a written legal agreement between the individual creating the trust and the person or institution named to manage the assets held in the trust (the “trustee.”) In many cases, it is appropriate for you to be the initial trustee of your living trust, until management assistance is anticipated or required.
WHOM SHOULD I NAME AS MY EXECUTOR OR TRUSTEE? After your death, the executor of your will and the trustee of your living trust serve almost identical functions. Both are responsible for ensuring that your wishes, as set forth in your will or living trust, are implemented. Although your executor is generally subject to direct court supervision, both the executor and the trustee have similar fiduciary responsibilities. It’s generally preferable to name the same person as the executor and the trustee or successor trustee. The trustee of your living trust may assume responsibilities under that document while you are living. While you may act as the initial trustee of your living trust, if you become incapable of functioning as a trustee, the designated successor trustee will then step in to manage your assets for your benefit. An executor or trustee may be a spouse, adult children, other relatives, family friends, business associates or a professional fiduciary such as a bank. There are a number of issues to consider. For example, will the appointment of one of your adult children cause undue stress in his or her relations with siblings? What conflicts of interest are created if a business associate or partner is named as your executor or trustee? Will the person named as executor or successor trustee have the time, organizational ability, and experience to do the job effectively?
WHAT IS DURABLE POWER OF ATTORNEY? In this document, you appoint another individual (the “attorney-in-fact”) to make property management decisions on your behalf if you are incapacitated. The attorney-in-fact manages your assets and must do so in a prudent manner accountable to you and solely in your best interests.
WHAT IS A DURABLE POWER OF ATTORNEY FOR HEALTH CARE? This document allows the person named as attorney-in-fact to make health care decisions for you when you can no longer make them for yourself. It may also contain statements of wishes concerning such matters as life sustaining treatment and other health care issues, and instructions concerning organ donation, disposition of remains and your funeral.
WHAT IS A HOMESTEAD DECLARATION? A homestead declaration is a legal document that claims and registers a particular house as the owner’s homestead. When the document is signed by the owner and recorded in the county where the house is located, it helps to protect the house against loss to creditors. The legal effect is to immunize the house and the land on which it is situated from many legal enforcement measures. For instance, if a homeowner files a petition in bankruptcy, it may be possible, because of the declared homestead, to retain the family home, or at least a portion of the equity in the property, instead of losing it to creditors.