What is Estate Planning?
Estate Planning is the process of arranging for the transfer of your property upon your death or incapacity. Succession planning is handled using either a Last Will and Testament, a Revocable Living Trust, or preferably both. In this article you will find more information about the differences between a Last Will and Testament and a Revocable Trust.
What is the difference between a Will and a Trust?
A Last Will and Testament is a written declaration of who you would like to receive your property and who you want to raise your minor children when you pass away. A Will should also include the person nominated as Personal Representative, who will be responsible for managing the estate. After a person passes away, the original copy of their Last Will needs to be delivered to the probate court of the county where they last resided. This is because any bequests made under a Last Will and Testament will need to be carried out under a court supervised process called probate. The court must ensure that the Will actually exists, that it appears valid on its face, and that the language of the document is followed. The court must also give the opportunity to potential heirs, creditors, and other interested parties to join the case. For that reason, it is said that Last wills and testaments are public records once they are filed for probate.
Similar to a Will, a Revocable Trust is also a written declaration of who you would like to receive your property at your passing. However, unlike a Will, a Revocable Trust is a private document which allows you to pass property without the delays, cost, and publicity of Probate. A Revocable Living Trust allows you to keep your property protected from lawsuits brought against a beneficiary other than yourself. When a bequest is made using a Last Will and Testament the beneficiary will eventually get the gift outright, any funds received can be saved, spent, or squandered according to the beneficiary’s wishes. A trust can allow for important limitations on the use and protection of any funds inherited, so that the beneficiary is protected from lawsuits, creditors, divorce, etc.
Simply stated, a Trust can accomplish a lot more than a Last Will, such as; allowing your family to avoid the probate process; protecting your family’s privacy; providing for your children, grandchildren, and pets; helping to plan for your incapacity; and protecting your property from lawsuits. This is why we recommend many Mile High Estate Planning clients use a Revocable Trust instead of a Will to pass their property.
The chart below is a comparison of Wills and Trusts.
What Happens if I Die without a Will?
If you die without a Last Will and Testament the default laws of the state you live in at the time of your passing will govern the distribution of your property. For some, these default laws may reflect their wishes, for many these laws do not reflect their wishes in which case it is very important to create a Will. However, even if you do not have a Last Will and Testament in place, your estate will still need to be probated by the court, a process known as intestate probate. During intestate probate, the court will require that a Personal Representative is named from the surviving family members, a process that could turn contentious if more than one person wants the responsibility. Instead of ensuring the estate distributions are made in accordance to the Last Will and Testament, the court will instead expect the estate is divided following the guidelines found in the law.
What are Incapacity Documents?
Most people are aware of the importance of planning for their death, however, many people overlook planning for incapacity. This is unfortunate because most people are incapacitated at some point in their life and not having the proper documents in place can result in a costly conservatorship and guardianship proceeding. Incapacity Documents include a Financial Power of Attorney, Medical Power of Attorney, HIPAA Release, and a Living Will.
What Does an Estate Plan Usually Include?
We typically recommend that most client have all seven of the primary estate planning documents. The seven primary estate planning documents are…
Click here to read more about the Seven Primary Estate Planning Documents.
Why Do I Need to Create an Estate Plan?
Here are ten reason to create an Estate Plan…
What is Probate?
Probate is the court process for distributing your property at death. All interested parties and creditors are required to be notified and must be given an opportunity to object to the planned distribution of your estate. In many cases probate can be a costly, time consuming, and public process. By working with the team at Mile High Estate Planning, we can create a plan that will allow your family to receive your property without going through the Probate process.
When Should I Create an Estate Plan?
Many Estate Planning techniques are ineffective if employed too closely to one’s passing. The best thing to do is create an Estate Plan today so you can give your family the maximum benefit of your property and so you can stop worrying about needing to create one!
How Often Should I Update My Estate Plan?
Anytime there is a major life event in your family such as a birth, death, divorce, or marriage you should review your Estate Plan. Additionally, you should update your plan any time there is a change in the law.