ESTATE PLANNING

Do I need estate planning documents?

 If you were to pass away without a Last Will & Testament or a Revocable Living Trust, your assets would be divided and distributed to your family members in accordance with state statute.  However, state statute does not consider anything other than a blood-line relation, so your assets could be divided among your parents, children, siblings, aunts, uncles, etc.  In addition, state statute will determine who would care for minor children and manage their assets.  For some, this is fine and they are happy with the state government making those decisions.  For those who want to make the decision themselves, you need a Will or a Trust.  With or without a Will, your assets have to go through the “probate” process.  That means a long, possibly costly process wherein the county court reviews, scrutinizes and ultimately decides if and when your assets will be distributed and if the provisions of your Will are to be adhered to.  Probate can be avoided with a Revocable Living Trust.

 Below is an explanation of the differences and what may be better for you and your family.

 What Is a Will?

A Will is your written document—signed, notarized and witnessed—that directs how you want your property to be distributed at the time of your death. You can change it at anytime as it is subject to amendment at any time during your lifetime.  With a Will, upon your death your beneficiaries must go to court and have the court approve the transfer of assets.  This is called the probate process and can take as long as 12 months to complete.  It can also be expensive as the court charges significant fees as will the attorney who will probate your estate.

What Is a Living Trust?

A living trust is also your written document that provides lifetime and after-death property management. Essentially, the Trust re-titles your assets into the name of your Trust.  This means at your death, your assets will immediately and automatically transfer to your designated beneficiaries without the need to go to court.  With a Trust, you serve as your own Trustee which means you still control (and own) all of your assets.  The trust instrument will provide for a successor Trustee upon your death or incapacity. Court intervention is not required. Living Trusts are also used to manage property. If a person is disabled by accident or illness, the successor trustee can manage the trust property. As a result, the expense, publicity, and inconvenience of court-supervised distribution of your estate are avoided.

When the living trust is properly written and funded you can:

·      Avoid probate on your assets;

·       Save significant time and money by avoiding probate;

·       Plan for the possibility of your own incapacity;

·       Control what happens to your property after you are gone;

·       Use it for any size estate; and

·       Prevent your financial affairs from becoming a matter of public record.

For most people, a Trust is a better way to insure your goals in estate planning are achieved.  You have more control with a Trust and the distribution of your assets is much more efficient.

 Trust vs. Will Considerations

There are many positive reasons to establish a Trust but do not overlook the fact that it will involve more upfront effort and expense. To determine if you should make the extra effort and invest in the expense of a trust, answer these questions:

Do you have minor children? A trust allows you to establish provisions specifying when a child will be entitled to any assets held in trust.  For example, you can stagger the distribution to your children at different ages.  The first distribution could be at age 20, then the next at age 25, etc.  There is no required age, it is entirely up to you.

You can also direct who would care for your children in your absence.  You can name more than one person just in case the first person named is unable to provide the care.

You do not need large assets to benefit from a Trust.  A common mis-conception is that a Trust is only for the mega-wealthy.  The truth is a Trust simply makes it easier for your family and beneficiaries at the time of your death because all of the asset transfers have been contemplated and directed.  Whether your assets total $25K or $25M, a Trust just makes things easier.

So what is best for you? In many respects, a Living Trust and a Will accomplish similar objectives. A Trust, however, allows you to realize other objectives that a Will cannot.  Whether or not a Living Trust is better for you than a Will depends on whether the additional advantages are worth the cost. When choosing, remember that one size does not fit all. What is right for one person may not be right for everyone. Your estate plan should be prepared in a way that best meets the needs of you and your family.