Wills and Trusts
There are several ways to direct how your property will pass at your death. Assets like houses and bank accounts are often jointly titled with rights of survivorship. These assets pass directly to the surviving joint owner, regardless of whether your will says, and do not pass through probate. Additionally, assets that have beneficiary designations in place, like life insurance and retirement accounts, are not subject to a will and usually do not pass through probate. The only assets that are subject to a will are assets titled in your own name that do not have beneficiary designations, like stock, real property, automobiles, business interests and individually titled bank accounts.
We can help you decide which documents you should use in your estate plan. The work we do is not simple. Estate planning is a highly technical field. There are a lot of moving parts, and each part can be of critical importance. That said, we are committed to explaining your plan to you in a simple manner. What good is an estate plan if you do not understand how it works to meet your needs? You will leave our meeting with that understanding.
In addition, we will provide you with the simplest solution possible. We are not in the business of upselling. We never use scare tactics to sell you more of an estate plan than you actually need. You will receive the right estate plan for you, tailored to accomplish your specific goals.
Wills The most common document in an estate plan is a will. A will sets out a person’s wishes for the disposition of his or her assets at death. A will can also be used to name a guardian for minor children. A will is carried out at death through the probate process. A will can be amended or revoked (often using a codicil) at any time until you no longer have capacity or you pass away. There are special formalities in place to make sure that a Will is authentic and is actually what the Testator (the person making the Will) wants. Each state has its own rules about what makes a valid will, which is why relocating should prompt a visit to a local attorney to make sure your will is still enforceable. Generally, wills must be in writing, require witnesses, and a notary and be signed by an adult who is of sound mind, knows what he or she wants to do and is not being coerced.
A Revocable or Living Trust is often a part of a client’s estate plan and can also be used for incapacity planning and to simplify probate. A trust is a separate legal entity, like a corporation or an LLC (limited liability company), which can own assets. The grantor creates the trust and in the trust document sets forth directions about how trust property should be managed and names the beneficiary(ies) who will benefit from the property. The grantor also names a Trustee to manage the trust property on behalf of a trust beneficiary.
Because a trust’s authority can extend beyond your life and provides the rules for how your property is to be managed and shared, a revocable trust is an excellent will substitute. Remember that only assets titled in a deceased person’s name are part of the probate estate. If you create a trust and transfer property into the trust during your life, then upon your death, those assets do not need to go through probate. Rather than be part of a legal proceeding, the trustee will follow the private directions you set forth in the trust to distribute the assets or hold them for your beneficiaries. If you title substantially all your assets in the trust, there will be very little that needs to pass through probate. And since probate fees are based on the value of the probate estate, the fewer the probate assets, the smaller the fees.
A revocable trust is a particularly useful tool to avoid ancillary probate. Ancillary probate is a separate legal proceeding required to transfer title of out-of-state real property at death. It is held in every state where the decedent owned real property. To avoid these costly proceedings, you can transfer the title of the real property into a revocable trust. You still retain full control of your property, but eliminate the need for your loved ones to open ancillary probate estates upon your death.
Note, creating the trust does not simplify probate. Instead, you have to transfer the title of your property into the trust so to avoid probate for those assets. Also, revocable trust assets are not protected from the grantor’s creditors. Further, it may be wise to open a probate estate, even when there are few assets in the decedent’s name, in order give a finite window of time for a decedent’s creditors to make claims.