Estate Planning
What are my Options?
We want help as much as we can when it comes to Estate Planning. The information contained here is not meant to replace a competent attorney, but instead to give a general idea regarding how to think about the process and highlight some of the major decisions that may come into play. Okay, here we go.
Estate Planning is a broad terms that covers everything related controlling the assets in your estate. This can range from incredibly simple to highly complex. At the end of the day there are really only 3 options:
Estate Planning is a broad terms that covers everything related controlling the assets in your estate. This can range from incredibly simple to highly complex. At the end of the day there are really only 3 options:
- Do Nothing (Intestacy)
- Sign a Will
- Create a Trust.
So Which One Is Best?
As with almost everything the answer is “It depends.” Each of the different options have their own strengths and weaknesses. The best option for you will likely be determined by balancing your goals against the cost and benefits of each option.
Intestacy - No Control At All
These are default rules that the court uses in all cases when the decedent (the person who died) left invalid instructions, or none at all regarding what to do with their property. It gives everything to relatives first and allows for NO control over who gets your assets. This can be great if you don’t have many assets, and like the default rules. It also requires no planning no maintenance, and no documents. It is automatic and easy at the expense of ignoring your wishes. Did you always promise that your child could have your wedding band? If you die intestate the question of who gets your band, as well as every other possession will be determined solely by the court in its judgment. This is accomplished by a processes called Probate. The court will look at the assets in the estate, then they look for beneficiaries, finally they apply the rules and distribute the property.
Sign a Will - You Control Who Gets What
A will is a signed document with instructions about what you would like to happen with the property in your estate. The same court process of probate is used, but the court throws out the default rules of intestacy and substitutes your instructions. Depending on the wording of the will it can be quite comprehensive and they also tend to be pretty fast to create and easy to change. In general when you sign one along with two witnesses, it will immediately revoke any previous will that you had in place. In this way you can change everything as often as you would like. The downsides of a will are that they are generally inadequate for protecting very large estates from taxes as well as having privacy concerns. The probate process requires that your will be filed with the court. This makes it a public document which means that your property and how it was divided becomes public information.
Create a Trust - Maximum Control Possible
Trusts are amazing in what you can do with them. It allows for an unlimited amount of instructions for how to distribute your estate. If set up correctly trusts can even continue to exist forever, allowing you to contribute to causes you care about and achieve your goals long after you are gone. Perhaps a trusts greatest benefit is that they can be used to avoid probate, which removes the courts involvement in your estate. This allows for privacy and no one needs to know what happens with your property unless you allow them to. Finally trusts allow for a great deal of tax protection if used properly, however this likely will not be an issue for any but the largest estates. The problems associated with a trust is that there is ongoing work to maintain them particularly if a lot of instructions are given to the trustee. They are also cumbersome to set up and equally as cumbersome to change if that becomes necessary.
*Note*- This information is necessarily incomplete without knowledge of the facts in your case. This article is for informational purposes and cannot form the basis of an attorney/client relationship.