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Casper, WY 82604
Wills and trusts are formal legal documents used for the purpose of creating an “estate plan.” When people hear the word “estate,” they automatically think it's only for people with millions of dollars in assets, chauffeured limousines and Downton Abby-style homes with servants and gated driveways.
Believe it or not, however, you have an estate. In fact, nearly everyone does. Your estate is comprised of everything you own — your car, home, other real estate, checking and savings accounts, investments, life insurance, furniture and other personal possessions. No matter how large or how small, everyone has an estate, and they all have something in common: you can’t take it with you when you die.
When that happens — and it is a “when,” and not an “if” — you probably want to control how those things are given to the people or organizations you care most about. To make sure that happens, you need to provide instructions stating to whom you want to receive something of yours, what you want them to receive, and when they are to receive it. You will, of course, want this to happen with the least amount paid in taxes, legal fees and court costs.
When you write a set of instructions to give your stuff away when you die, it’s called “estate planning.” It is simply making a plan in advance and naming to whom you want to receive the things you own after you die. It’s your estate, and it’s up to you to plan for what happens to it.
A will is really nothing more than a letter to the probate judge that tells the judge who is to be in charge of your stuff (your “personal representative”) and who gets it after you are gone. A will provides your instructions, but it does not avoid probate — in fact, if your plan is based on a will, it guarantees probate. Any of your property that’s titled solely in your name when you die must go through your state’s probate process before it can be distributed to your family or others. (If you own property in other states, your family will probably have to open a probate in each state.)
The process varies greatly from state to state, but it can become expensive with legal fees, personal representative fees, and court costs. It can also take anywhere from a few months to two years or longer, depending on what you own and whether or not everyone gets along with each other. With rare exception, probate files are open to the public, and excluded family members are encouraged to come forward and claim a share of your estate. In short, the court system, not your family, controls the process.
Not everything you own will go through probate. Jointly-owned property and assets for which you can name a beneficiary — for example, life insurance, IRAs, 401(k)s and annuities — are not usually controlled by your will and usually will transfer to the new owner or beneficiary without probate. But there are many problems with joint ownership, and avoidance of probate is not guaranteed. Lifetime joint ownership may subject your property to the other joint owner’s debts and liabilities. If a valid beneficiary is not named for beneficiary assets, they will have to go through probate and will be distributed along with the rest of your estate. If you name a minor as a beneficiary, the court will probably insist on a guardianship until the child legally becomes an adult.
For these reasons a revocable living trust is preferred by many families and professionals. It can avoid probate at death (including multiple probates if you own property in other states). Since a trust is administered by people you appoint as trustees, court involvement is generally unnecessary. If you become mentally disabled, you can put people in charge of your financial affairs in whom you have confidence. A trust also allows you bring all of your assets (even those with beneficiary designations) together into one plan so that everything you own will be handled in the way you choose. Trusts provide maximum privacy, are valid in every state, and can be changed by you at any time. Your trust can also reflect your love and values in a way that will be meaningful to your family and future generations.
Unlike a will, a trust doesn’t have to die with you. Assets can stay in your trust, and be managed during the trust administration process by the trustee you selected until your beneficiaries reach the age or situation in life when you want them to inherit. Your trust can continue longer to provide for a loved one with special needs, or to protect the assets from beneficiaries’ creditors, spouses and irresponsible spending.
A living trust is more expensive initially than a will, but considering the fact that it can help to avoid court interference at incapacity and death, many people consider it a bargain as it is generally less expensive to administer after your death.
To learn more about living trusts, read Understanding Living Trusts. This article explains what living trusts are and how they work, explains probate, techniques for avoiding probate and benefits of a trust-based estate plan.
Whether you use a will or a trust to put your plan in place, neither will work the way you expect them to without proper probate or trust administration. Working with a skilled professional who can guide and assist you through the process will help ensure that instructions are followed, and minimize risk and liability to those who are responsible to carry out the instructions.
"Believe it or not, however, you have an estate. In fact, nearly everyone does. Your estate is comprised of everything you own — your car, home, other real estate, checking and savings accounts, investments, life insurance, furniture and other personal possessions. No matter how large or how small, everyone has an estate, and they all have something in common: you can’t take it with you when you die."
Perkins Law P.C. | 1607 CY Avenue, Suite 104 | Casper, WY 82604 | (307) 315-6177 | Fax (307) 315-6188 | Email