Will and Trust Clauses You Should Know
Because every family is different, every will, trust or other estate planning document must be unique in order to meet the family’s specific needs. The following are several important will and trust clauses that every individual should know before assigning their assets in an estate planning document and entering the probate process.
Exordium Clause
This basic, introductory clause states that the will in question is the most recent will crafted by the individual and that it should serve to revoke all other wills that may have come before it.
Fiduciary Appointment and Powers Clauses
These are the clauses in a will or trust that name the person who be in charge of distributing the finances of the estate, and lays out in detail what powers this individual will have. The fiduciary duty clauses are crucial because they leave no doubt as to who is responsible for making sure that those named in the estate will get their money or property as intended.
No Contest Clause
Some people can see trouble coming from a mile away – and they recognize when their family is going to experience conflict over their estate after they pass away. For these individuals with foresight, there is the no contest clause – which simply states that any individual who is named in a will or trust, and contests their inheritance in any way, will not get their money.
Generation Skipping Clauses
Sometimes, kids can be a handful. And when they get older without developing any financial skills, it can be a trick situation, especially for individuals who want to get money to their grandchildren, but don’t want their own kids to blow it all. Using generation-skipping clauses can not only help get the money in the right hands, but also provides a wealth of tax-saving benefits.
Tax Apportionment Clause
Guess who gets the most money out of your estate? If you said Uncle Sam, you’d be correct. The problem with estate planning related taxes is that the government tends to burden everyone who is getting a distribution equally, regardless of how much money they are receiving. In order to distribute the money more fairly, use a tax apportionment clause. These clauses allow you to determine how everyone mentioned in your will is going to be impacted by the tax code.
Spendthrift Clause
Often, a child stands to inherit a considerable sum of money from his or her parent. But what if this individual is unable to control their spending? In this case, the parent might want to consider a spendthrift clause. Spendthrift clauses give a trustee control over any inheritance money so that the child will not use the funds unwisely. Spendthrift clauses also protect inheritance funds from the creditors of those named in the will or trust.
Common Disaster Clause
The common disaster clause directs the executor of a will or trust on how to manage the estate in the event that husband and wife die simultaneously in an unexpected accident. These are important clauses used specifically in the event of a car accident, plane crash or other unforeseen disasters.
