Why does having an estate plan in place matter? There are many reasons to have one, perhaps best highlighted by what can happen if you don’t have an estate plan in place. If you die without a will, you die intestate, which means that your assets will become the responsibility of a probate court. It’s also likely that your assets will pass through probate if you die with a will but without a funded trust in place.
Probate is the legal process through which the court makes sure that, after you die, your will is valid, your debts are paid, and your assets are distributed according to that will. Probate costs vary in each state, but a good rule of thumb says that probate will probably be more expensive than setting up a proper estate plan with a revocable living trust. Probate takes a minimum of six to nine months and often takes longer than one year. Probate is also a public process — your will is filed with the clerk of the circuit court where you lived, and becomes public record.
How do you avoid probate? By making sure your accounts have your primary beneficiary and others set up — or have ‘payable on death’ designations — and by having a properly funded trust. Not every family needs a trust, but they can save the surviving spouse and family members the time and paperwork of dealing with the government. It is no surprise that trusts have become much more commonplace and accessible to a wider range of people from different socioeconomic backgrounds.
When comparing a last will and testament with a revocable living trust:
- Both are legal documents that contain a set of instructions.
- In both, you name someone to handle your affairs after you die.
- In a will, this person is called an executor.
- In a living trust, this person is called a trustee.
- In both, you name who you want to receive your assets after you die.
- A will is filed with the clerk of the circuit court where you lived when you die.
- A living trust can avoid probate when you die, can control all of your assets, and prevents the court from controlling your assets at incapacity.
As you can see, your estate plan is not just for when you die. Except for the will, these documents are also useful while you are still living. With the revocable living trust, you will set up your successor trustee(s) who will benefit once you are unable to manage your affairs. By handling this when you are still of sound mind, you avoid the necessity of having a guardian of your estate appointed to handle your affairs under the supervision of the court.
There are two other important documents that allow you to assign that responsibility during your life: the powers of attorney for property and healthcare. These documents appoint someone to step into your shoes and either do business or make medical decisions on your behalf. While you are still of sound mind and able to make your own decisions, you are still free to do so. However, should something happen and you are unable to make your own decisions, you have had the foresight to have someone whom you trust appointed to make decisions for you.
A living will is another component of the basic estate plan. We often refer to this document as the “belt and suspenders” of the power of attorney for healthcare. This document is put on file with your medical provider and gives your directions regarding your care should you become terminally ill.
Each of these documents contains your wishes, but it is always important to have candid discussions with your family members about your end-of-life wishes. At Greenberg & Sinkovits, we know that these are difficult conversations, and we are here to help you understand the process and guide you, as you ensure that your family is left with an organized and clear set of instructions for finalizing your estate and carrying on your legacy.
If you have questions or need legal help with your estate planning, contact our offices for a free consultation.
