Core Estate Planning Documents - Wills & Trusts

A very common theme in our office is when a prospective client calls and says, "I need a Will," or "I need a trust." When we ask why one of those is what they need, they typically respond by telling us that someone they know told them (friend, family member, advisor, etc.) or it's what they're supposed to have. We love this because the reality is that most people really don't understand what either is, but know they need something.

Frequently, clients believe that a Last Will avoids probate and the other is that trusts are only for "rich" people or those with a lot more assets than "us." So, what does a Last Will do? A Will is basically a formal, typed up letter (legal document) meant for a judge to interpret sometime down the road (hopefully a long time) when we die. It serves as direction as to what we want to have happen with all of our assets and who we want to take care of our minor children. The Will also lists who we want to be in charge (the executor) of making sure our stuff goes to the people we want it to go to (the beneficiaries). And we get to be as simple or complicated as we want. But that's really it. The Will itself does not avoid probate. In fact in most circumstances, it guarantees it. If we don't have a Will, the State's rules come into play and determines where all of our assets and property goes, and who is in charge of our minor children.

Probate is the court process that is potentially involved when we die (depending on how we owned our assets during our lifetime) to determine where all of our stuff goes. If we didn't have beneficiary designations on our accounts (life insurance, IRAs, 401(k)s, etc.) or beneficiaries on those accounts who survived us and we didn't have our assets in a trust of some sort (to be discussed soon) then our estate is likely to go through probate when we die. In a probate case, which is a public process, the judge is in control and ultimately gets to decide where all of our stuff goes (either based on our Will or the State's rule book). In most cases, our executor or the administrator of our estate (if we didn't have a Will) will have to hire an attorney to navigate and handle the probate process. The probate process, on average, is likely to take somewhere between 8-12 months and cost the estate roughly 2-5% of its value.

The most common way to avoid probate is with a revocable living trust. This is the most common type of trust out there. Most of your friends and family who mention "my trust" likely have one of these. We like them because they offer protection from probate and flexibility. We can make changes to them as life goes on and things change. The trust is a vehicle for us to own our assets (i.e. bank and brokerage accounts, stocks, bonds, CDs, annuities, real estate, etc.) and consolidate them so that when we pass away we avoid probate and pass things to our beneficiaries in as much of a detailed and protective manner as possible. What if our children or grandchildren are young when we die? Do we want a 17, 18, or even 25 year old having immediate access to potentially large sums of money? We can provide asset protection to our beneficiaries in case they are sued or get divorced down the road after we die. The bottom line is that our wishes control and it's done privately. It can all be done within the family, or we can have a banker or trust officer handle things. Either way, we're not having to do it publicly in a court room over an indefinite period of time.

In every Will we appoint an "executor" and in every trust we appoint a "trustee." These individuals (or corporations—i.e. trust companies, banks, or financial firms) have a very similar role. They are in charge of making sure that when we pass away (or in the case of a trust, starting at the point of when we become incompetent) our assets are being managed appropriately, our expenses are taken care of, and that our beneficiaries all receive what we wanted them to as per the document we executed.

In the end, it's about planning to ensure that what we want to have happen when we die actually happens. We recommend consulting with an estate planning or elder law attorney regarding these matters depending on what one's needs are. That way options can be presented and educated decisions can be made. The plan we do not recommend is "it's OK, things will work out."

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