My parents died in their 40s and had no Will or trust. As a result of this (and their complete lack of emergency planning) my siblings and I were scattered to the wind with almost no assets. This topic hits close to home.
Fortunately, estate planning doesn’t have to be that complicated. When you die, your assets have to be distributed through some mechanism. Wills and trusts aren’t the only tools that do this but they are two of the most widely used. Let’s see how they work.
Important Disclaimer – I am not an attorney. This is for general information only. Before making important estate planning decisions seek out competent and professional legal advice.
What Is A Will?
A Will is a document that simply spells who is going to get what when you die. In the Will, you also state who the executor is going to be. That’s the person will act as your representative after you die. It’s a lot of work because the executor has to take part in the probate process.
Probate is a painful, drawn-out, expensive procedure during which the judge reads your will and then decides what to do with your assets and liabilities. The executor is the person who goes to court and then has to do everything the judge tells her to do. That includes gathering up all your assets and then distributing them as directed. Fun.
Advantages of a Will
- A Will is simple and cheap to establish.
- You can change your Will as often as you want while you are alive.
- Some states accept the Will’s instruction on appointing guardians for minor children.
- You can leave assets to anyone you like. They don’t have to be part of your family.
- Since the Will has to be probated through the courts, there is more oversight. That means there is less opportunity for tricksters to defraud, steal and muck up your estate.
Disadvantages of a Will
- Probate can take a very long time. Even years. During that time, your family don’t have use of that money. That may put them under financial stress. Depending on where the estate is probated, your executor may not be able to get her hands on your assets until she is appointed and affirmed by the court. That means nobody is in charge of preserving your estate during that period.
- If you own real estate in other states, your executor may have to open an additional probate in those states.
- Everything in your Will is public record. Anybody can see what you had and who got what both during and after probate.
- It’s easy for someone to challenge the Will if they claim you were mentally incapable when you created it. That drags the process on even longer – and escalates the cost. If they win their suit, your final wishes are ignored.
- Your Will only operates once you kick the bucket. If you become incapacitated, someone needs to be appointed as conservator. Yuk.
Some of these drawbacks are serious. Tomorrow we’ll look at the pros and cons of the Living Trust and after that we’ll consider which might be the most appropriate way for you to go.