An estate plan is always necessary unless you want your estate to pass through “operation of law” which involves the long, uncertain, public and expensive process at your death with a stranger (the courts) deciding who gets everything you leave behind. This process often leads to heartache, delay and additional stress for those you leave behind, especially if they need the assets to sustain the family or if (all too commonly) family members may fight over what you leave behind.
A simple Will comes into effect at your death, controls the distribution of your assets (who gets what and when), and names who the Executor of your estate, the person you chose to be in charge and carry out your wishes, will be. A Will is the most basic form of estate planning and still requires the estate and its assets to go through the probate process, meaning that there will be an expense and delay in transferring assets at your death. A will is also public, meaning that a record of exactly what you left and to whom is available. In our view, it’s best suited for those with limited and simple assets, few or no heirs, and those with no minor children, dependents or pets that require specific care and guardianship guidance.
A Revocable Living Trust (RLT)on the other hand includes all the elements of a will, is established and can take title to a certain assets during your lifetime when you (and your spouse) can actively manage and change it. The RLT avoids probate, passes assets privately with little or no public record and typically includes a variety of sophisticated estate tax avoidance measures. The RLT also names and has specific guidelines for the Trustees of your estate, appoints Guardians for your children and dependents and can retain wealth and “sprinkle” income off the principal to your heirs. It allows a countless variety of sophisticated directives including what you want done if you have some sort of incapacitation condition like an illness or mental issue, typically referred to as “living will” and “health care power of attorney” provisions.
Finally, don’t forget that a well drafted trust has a variety of checks and balances designed to protect the beneficiaries, the folks you are leaving behind. One such safeguard is called a “trust protector” a person designated with a specific set of powers including the power to remove and replace the trustee if the trustee is unwilling or incapable of serving under the terms of the trust or if the trustee is actually creating some active loss or problem. A trust can also protect what you leave from your heirs’ creditors and spouses if drafted with “spendthrift provisions” that say the trust proceeds are not to be used for paying judgment creditors and other debts.
If you don’t have an estate plan, or have had substantial changes to your family structure, wealth, children’s guardians, asset structure or gifting plans it’s time to get experienced help.
The basic estate planning tools noted above are only the tip of the iceberg. These are “death planning” tools, and do not protect assets during your life. A wide variety of Asset Protection, estate planning and family wealth management tools are available more easily and cost effectively than you know. Get personalized, professional help in figuring out what you need and using it the best possible way.