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Questions and Answers Regarding Legacies and Planned Gifts |
Advantages of Wills and Trusts Q. What is a will? A. A will is essentially a revocable document that is used to direct the distribution of an individual's estate at death. It usually designates an executor to fulfil the directives contained in the will. Q. Are all wills the same? A. Wills are different, depending on an individual's property, family dynamics, business concerns, charitable interests, etc. There are different kinds of wills, too. The following is a brief overview of the various kinds of wills: Simple Will - In uncomplicated estates, a simple will provides for outright distribution of an individual's assets. Testamentary Trust Will - This type of will allows for one or more trusts to be set up for some or all assets to go into following the individual's (testator's) death. Pourover Will - Used in conjunction with a living trust, its primary function is to name the guardians of minor children and to transfer any assets in the decedents probate estate to his or her trust at death. Joint Will - When spouses or any two people sign a document, that might constitute a contract, the document is called a joint will. Oftentimes, these wills result in litigation. Living Will -These documents are often executed at the same time a will is signed. The term living will is a misnomer, because a living will is not a will at all. The living will does not dispose of property, rather, it directs hospitals and doctors about an individuals desire for life sustaining support, or not, in the event of a terminable illness, accident or illness, or cannot be restored to consciousness. |
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The American Thyroid Association (ATA) is a 501 c3 nonprofit organization. Your gift is deductible according to tax law. The ATA Federal ID number is 41-6038600. The ATA provides this information for the benefit of potential donors. It is not intended as legal or other professional advice. Individuals should always consult their own professional financial and legal counselors for such advice and decision-making. |
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Q. Why have a Will? A. Approximately half of all Americans die without a will (this is called Intestacy). Distribution of property usually is delayed in intestacy, as the probate court administration process takes more time and can be more expensive. A will appoints an appropriate executor you have named and sets out the extent and proper distribution of property. In intestacy on the other hand, distribution is established by prescribed formula, which may or may not handle the distribution in a manner that is in the best interests of the deceased individual's (decedent's) family or other interests such as charities. As an estate becomes more complex, the potential for less than ideal distribution of its assets increases, so does court related costs. The special needs of a child, parent, spouse, relative or friend may not be addressed. Moreover, the opportunity to protect a larger estate from unnecessary taxation through establishment of estate devices such as a by-pass trust, charitable gift, etc. can only be accomplished by a will or trust. Q. Does a Will provide privacy in the distribution of property? A. Wills are settled in Probate Court. Court documents and hearings are public. Q. What types of property can be passed without a will or probate? A. Life insurance, pension benefits, joint ownership property, bank accounts and securities with right of survivorship and property held in trust all bypass probate administration. The more property that bypasses probate, the lower will be the costs related to distribution. The transfer of property is accelerated, too. Q. Can you provide examples of appropriate language for a bequest in my will? A. The following bequest language may be used: To the American Thyroid Association, Unrestricted - "I give to the American Thyroid Association, a non-profit 501 (c) 3 incorporated in the state of New York , the sum of $__ (or percent of the remainder of my estate) to be used for the benefit of the American Thyroid Association for its unrestricted purposes." For a specific purpose - "I give to the American Thyroid Association, a non-profit 501 (c) 3 incorporated in the state of New York, the sum of $ (or percent of the remainder of my estate) to be used by the American Thyroid Association for support of ___." To establish an endowed fund - "I give to the American Thyroid Association, a non-profit 501 (c) 3 incorporated in the state of New York, the sum of $ (or percent of the remainder of my estate) to establish a permanently endowed scholarship fund to be known as the —your name—Scholarship Fund (may be any name you choose; the minimum amount for an endowed fund varies by purpose). Income but not principal from this Fund shall be used to provide financial aid for deserving thyroid fellows at a university determined by the American Thyroid Association Board of Directors. The Association's Secretary or other duly authorized officer shall administer the Fund. Unused earnings shall be added to principal." Trusts Q. What is a trust? A. In its simplest form, a trust is a legal relationship whereby an individual (grantor, settlor or donor) transfers property to someone (trustee or qualified trust company) who holds the property for the benefit of another (beneficiary). An individual may be both the grantor and the beneficiary. Q. What kinds of property can be placed in a trust? A. Any kind of real or personal property - money, real estate, stocks, bonds, collections, business interests, personal possessions, and other tangible assets can be held within a trust. Putting property in trust transfers it from your personal ownership to the trustee, who holds it for the beneficiaries. Q. Can you retain control of the property in trust? A. Through a revocable trust, which allows you to dissolve the trust, legal ownership can be regained at the discretion of the grantor. Through a testamentary trust, you retain control of your property during life, and at death property transfers to ownership by the trust's trustee. Q. Who is the trustee? A. A trustee is the individual, or a qualified trust company, who holds and manages the property in the trust. The grantor identifies the trustee when the trust document is established. Q. What kinds of trusts are there? A. Like wills, there are many types of trusts that are tailored to address specific objectives of the grantor. The following list provides a description of different kinds of trusts. Charitable trusts - A variety of charitable trusts exist that allow a donor to support qualified (charitable) organizations, such as the American Thyroid Association. In many cases, the donor is able to reduce current taxable income, capital gains tax, and estate tax while increasing the grantor's disposable income. Some charitable trusts provide income to the donor until death and others provide income to the charity for a defined period of time before distribution to non-charitable beneficiaries with less tax consequence. Discretionary trusts - The trustee is permitted leeway to distribute income and principal to various beneficiaries, or to control disbursements to a single beneficiary, as he or she sees fit. Life Insurance trusts - If properly designed, these provide a means for removing life insurance policies from an individual's taxable estate and allow for a tax-free transfer of assets to beneficiaries at the insured's death. Oftentimes, life insurance trusts are used to replace assets contributed to a charity. Income tax savings generated by the charitable gift are used to purchase a life insurance policy that provides income for a spouse following the insured's death or to pass assets to other family members or friends without estate tax. Living trusts (Inter Vivos trusts) - An individual's assets are placed in a living trust while he or she is still living. The grantor serves as the trustee and as the beneficiary during life. For all practical purposes, little change in how the grantor manages the assets when he or she serves as the trustee. However, at death the property in the living trust avoids probate. In addition, should the grantor become unable to manage the assets during life, the trust provides for a succession to carry out the grantor's objectives. Revocable trusts - A revocable trust is like a will, in that it can be changed, amended, cancelled, or revoked at any time by the grantor. Revocable trusts are not synonymous with living trusts, although most living trusts are revocable. A revocable trust can be designed to control all of the maker's property, totally avoid probate of the maker's estate, and maximize federal estate tax savings. Irrevocable trusts - These trusts cannot be altered or amended without the approval of a court. If the trust maker retains no rights in the irrevocable living trust and is not a trustee or a beneficiary of the trust, the assets of the trust can be excluded from the maker's gross estate for estate tax purposes. Spendthrift trusts - These trusts are designed to protect beneficiaries who are unable to manage their affairs in a manner acceptable to the grantor or who need protection from creditors. Support trusts - A trustee is directed to provide only as much income and principal as is needed for a beneficiary to receive education and support. Testamentary trusts - Trusts established by a will are called testamentary trusts. Since a testamentary trust does not exist until the will takes effect at death, assets cannot be placed in the trust during life. Hence, assets must go through probate before being placed in the testamentary trust. Q. Does a trust provide privacy? A. Most trusts usually avoid probate. No public record is generated. Thus, only the grantor, trustee, and beneficiaries know the contents. However, pourover wills that create trusts do produce public records of the contents of the trust. And in some states, when certain kinds of property is placed into a trust, such as real estate, securities, or a safe-deposit box, the trust may have to be registered, which creates a public record of the contents. Q. Is a trust better than a will? A. A will is required to pass residual property that is not held by a trust. Since disposition and ownership of property is already determined by a trust, no time, expense or disclosure is required in probate. Furthermore, trusts are easier to create and change. Process for a trust is not as formal as it is for a will. Most states require no witness or other legal language to execute a living trust or amendment to it. However, there may be pitfalls, such as tax problems, less protection, titling and other traps for trusts. Q. Should an attorney be consulted? A. There is no substitute for an attorney. An attorney and possibly a tax advisor should be consulted before creating, amending or replacing your will or trust. Estate planning requires care to create instruments that will meet your personal objectives, reduce taxes, provide for a smooth transition of your property to family, friends and charity. Q. Is any additional information available from the American Thyroid Association? A. We would be pleased to provide you with specific
information tailored to assist you in reducing your estate and/or
income tax burden through a planned or outright gift to the American
Thyroid Association. Please feel free to call us at (703) 998-8890
to discuss the options that may be suited to your estate planning
needs and objectives.
Contact Information |
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The American
Thyroid Association provides this information for the benefit of
potential donors.
