Without a will, the courts distribute your assets and property according to state statute. This is also known as intestate. Additionally, if you do not have a will, the court will decide who will become the guardian of your minor children in the event that both natural parents are no longer living.
A trust and a will work together. A “pourover” will works in tandem with your trust. A pourover will directs assets to be moved into your trust and administered accordingly.
No. After the marital exemption your spouse will only receive half ½ of your intestate property (the assets/property that you do not own jointly with right of survivorship). In general, your remaining intestate assets/property will distributed in following order:
Why does my will/trust not control my retirement accounts and life insurance polices? Your retirement accounts, including 401(k)s and IRA’s, and life insurance policies are distributed to the beneficiaries you choose for those policies and are not controlled by the terms of your will or trust. You will need to name a beneficiary (the person you want to inherit) to receive the benefits of your plan. In some circumstances you will want to name your trust as the beneficiary to ensure that the payouts of those policies are administered pursuant to the terms of your trust.
Estate: All that you own, including real and personal property.
Beneficiary: The person or people you choose to receive your estate. You can also choose to give your estate to a charity or organization.
Power of Attorney: A document by which you give someone authority to transact business on your behalf. A power of attorney is only valid during your lifetime.
Durable Power of Attorney: A document by which you give someone authority to transact business on your behalf and the authority remains in effect during your incapacity.
Will/Last Will and Testament: A will is a document stating who you want to inherit your property and assets. In your will, you also can appoint a guardian for your minor children. A will becomes effective at death and is not enforceable during your lifetime.
Executor/Personal Representative: The person you choose to carry out the terms of your will.
Revocable Living Trust: A revocable trust can be changed or revoked during your lifetime. It is a contract/agreement and is a way to manage your assets. You are the Trustee of your trust during your lifetime. After your lifetime, the trust becomes irrevocable (unable to be changed). Your specified loved ones (beneficiaries) will receive assets from your trust in the way you specify. You can choose when they get the money and what percentage you would like them to inherit.
Testamentary Trust: A trust that is part of an individual’s will. It does not take effect, and therefore cannot be funded, until the individual’s death. Because a testamentary trust is part of a will, it is a public document that gets filed with the court and is subject to probate and court supervision.
Trustee: The person (or a trust company or bank) you appoint to manage the assets you place in your trust. The Trustee will distribute your estate to your loved ones pursuant to the terms you set forth in your trust.
Living Will: A document stating your wishes about your medical care when you are unconscious or too ill to communicate. If you are able to express your own decisions, you can accept and refuse any medical treatment and your living will will not be used. In your living will, you can also specify whether you want to be an organ donor.
Health Care Surrogate: The person you appoint in your living will to carry out your wishes regarding your medical care. This person will also enforce the decisions you made in your living will.
Probate: Probate is a court process. The objective of probate is to ensure that the proper heirs (people entitled to inherit) receive the assets and property that they are entitled to receive. In some states, probate can be very complicated and expensive. However, in Kentucky, the probate process is relatively straightforward and inexpensive. If you have a will, the Court will distribute your estate as you specify in your will. If you do not have a will, the Court will distribute your estate intestate (by the laws specified in the Kentucky Revised Statutes).
Intestate: A legal term meaning a person who dies without a will. If you don’t have a will, your estate will be distributed according to Kentucky law.
Per Stirpes: A legal term meaning that if an intended beneficiary dies prior to receiving their inherited share, their share will then be divided equally among their descendants.
Assets you own jointly with rights of survivorship: Typically, property that you own jointly with another person (i.e., a home with both people listed on the deed), will automatically pass to the joint owner at the end of your lifetime. However, property that is only owned by you (i.e., cars, bank accounts, real estate, etc.,) will pass intestate.
Federal Tax Exemption: Currently, the federal tax exemption amount is over $5 million. This means that you do not owe federal taxes on an estate that is less than the federal exempt amount. If the gross estate (an accounting of everything owed) is more than this amount, an executor of the estate must file a federal tax return within nine months of a person’s death. The highest tax rate for estates larger than the federal exempt is 40%.
Kentucky Inheritance Tax: Whether you need to pay an inheritance tax depends upon the relationship you have with the deceased. Generally, the closer your relationship is with the deceased, the greater the exemption. For example, Kentucky allows an exemption (meaning no taxes owed) for Class A beneficiaries. This includes, spouses, children, stepchildren, grandchildren, parents, brothers and sisters, and half brothers and sisters.