Without planning, your estate may be split among ALL of the children of both marriages, or may go to your second spouse and she can decide where it goes.
Most people understand that having some sort of an estate plan is, as Martha Stewart would say, a “good thing.” However, many of us don’t take the steps to get that estate plan in place because we don’t understand the nuances between wills and trusts – and dying without either.
Here’s what will generally happen if you die, intestate (without a will or trust), with a will, and with a trust. For this example, we’re assuming you have children, but no spouse:
After that, state law will decide who gets what and when.
Keep in mind that since your death has been published to alert valid creditors, it’s not uncommon for predators (fake creditors) to come forth and make demands for payment – even if they’re not owed anything.
The bottom line? Dying intestate allows state law and the court to make all the decisions on your behalf – regardless of what your intent might have been. Publicity is guaranteed.
The bottom line? While a court oversees the process, having a will allows you to tell the court exactly how you want your estate to be handled. But, a public probate is still guaranteed.
You’ll have named a trustee to manage your estate with specific instructions on how your assets should be dispersed and when.
You do still need a will to pour any assets inadvertently or intentionally left out of your trust and to name guardians for minor children.
The bottom line? Trusts allow you to maintain control of your assets through your chosen trustee, avoid probate, and leave specific instructions so that your children are taken care of – without receiving a lump sum of money at an age where they are more likely to squander it or have it seized from them.
Don’t let the will versus trust controversy slow you down. Call the office today; we’ll put together an estate plan that works for you and your family whether it be a will, trust, or both.
Sarah and John Smith did a great job of organizing their life and getting an excellent estate plan in place. They put the originals in a safety deposit box. But, they forgot to give access to their appointed personal representative. They also did not share where the key was. The personal representative could not get into the box to get the original will and trust so that the estate could be distributed. Nor could she get the original will to get the judge to order the box opened.
In a safe place. But what is a safe place?
First, it is somewhere your agents named in your power of attorney, trust, and will can find them. Your representative should know where the documents are and have access.
If they are kept in a safety deposit box, your representatives should have access and a key to the box.
If they are kept in your home, then make sure your representative knows where they are and how to get to them. If in your home, preferably in a fire proof box.
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Here are 10 reasons, & a half, that estate planning is a total waste of time for you.
(Warning: satire ahead)
Congratulations, starting today, you have been chosen to know your exact date and time
Until then you will never be sick. No accidents. No incapacity. No dementia.
You have no reason to plan. Nothing will ever happen to you, so there will never be a time when you need help making decisions. You will never have a stroke. You will never develop dementia. No times where you need a little help.
You know the exact moment and can put things off until just a few weeks before.
Your children are completely responsible and good at handling money. They will not blow a large lump sum. They won’t travel, have parties, buy cars, and invest in things that lose value rapidly. No financial predators will call on them, ever.
You can leave them that large life insurance settlement without worry. They will be completely responsible in managing it. They don’t need any help or restraint in managing the money.
They will invest the money at a good rate of return. They will leave the principal alone, and live off the interest. They will put aside for their retirement years.
It doesn’t matter how good they get along now, your kids (unless you have an only child) will fight over $5 trinkets. Emotions run high.
Even with an only child, cousins will probably want something and fight for it.
Perfectly valid. If you don’t own anything, owe anybody, or even rent an apartment, then you don’t need a plan, at least for the end.
Without proper planning, you are going to pay more estate tax than you have to.
Okay, the exemption is around $5,000,000 right now, but that could change anytime. In 2016 the President has asked for the exemption to be lowered to $3,500,000 and the tax rate increased to 45%.
Probate is not a joyful experience for most people. For most people, it borders on emotional torment.
Probate is not free either. You must want to cost your children at least 6% of the GROSS estate.
If you are the last of your line, and no relatives can be located, then your estate will default to the state.
Your marriage will last forever without strife or divorce. You don’t need to worry about your spouse’s next marriage giving your hard work away to somebody other than your children.
Your children will never get divorced and have to give half of their inheritance to their ex-spouse.
Something that only takes 4 to 8 hours of your time can’t be that important or that good.
Surely if estate planning were really worth it, you would have to put in 100’s of hours of effort.
Something that says it can protect me during my life, protect my children from the foster care system, and protect my family after my passing must be snake oil.
You don’t need to waste the time, energy, or money needed to create a plan. After all, nobody really needs a plan for all the reasons listed above.
Without a will or trust, the courts will make the final decisions as to how to distribute your estate. With a plan, you decide. This is just one of the benefits of trusts in estate planning and the benefits of tax planning. Combined with the benefits of financial planning, and you have a great overall plan.
Trusts allow you to avoid probate, minimize taxes, provide organization, maintain control, and provide for yourself and your heirs. In its most simple terms, a trust is a book of instructions wherein you tell your people what to do, when.
While there are many types of trusts, the major distinction between trusts is whether they are revocable or irrevocable. Let’s take a look at both so you’ll have the information you need:
Revocable Trusts. Revocable trusts are also known as “living trusts” because they benefit you during your lifetime and you can alter, change, modify, or revoke them if your circumstances or goals change.
Irrevocable Trusts: When irrevocable trusts are used, assets are transferred out of the trustmaker’s estate into the name of the trust. You, as the trustmaker, cannot alter, change, modify, or revoke this trust after execution. It’s irrevocable and you usually can’t be in control.
As experienced estate planning attorneys, we can help you figure out whether a revocable or irrevocable trust is a good fit for you and your loved ones. Call us today to set up a meeting.
Personal circumstances and/or the law could change so that a presently irrelevant provision may become relevant and/or applicable in the future.
Starting with a longer robust document and possibly tailoring the document to meet the personal cosmetic preferences of the client enables a higher quality document.
It is better to start with as complete a document as possible and then consider eliminating provisions that might be clearly unnecessary.
Personal circumstances and/or the law could change so that a presently irrelevant provision may become relevant and/or applicable in the future.
A provision in one section of the trust that may appear irrelevant or unnecessary may have been purposefully included in the document for purposes of other sections.
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