If you have made the decision that the time is now to protect yourself and your family by creating your estate plan, that’s great! Now it’s time to decide if you will use a Last Will and Testament or a Trust to protect your family. When deciding which estate planning tool to use, it’s important to know what a Last Will and Testament won’t do.
1.) A Last Will and Testament Won’t Avoid Probate: A Last Will and Testament will not avoid the court process called probate. Unfortunately, distributing your assets upon your death is not as simple as reading your Will in a lawyer’s office like you see in movies or television shows. Once you pass away, your Will must be filed with the appropriate probate court with a petition to probate your Will. It is the probate court that will make sure that your Last Will and Testament is valid, giving interested parties an opportunity to object to your Will. Once the court determines that your Last Will and Testament is valid, the court will appoint your executor. Once appointed, your executor can begin marshaling your assets and giving notice to your creditors so they can submit claims for payment. Once creditors are paid, and if there are assets left in your estate, your executor can begin making distributions to your beneficiaries. As you may already know, the court system can be unpredictable, and this process can take several months to complete, or even longer if someone decides to contest your will.
2.) A Last Will and Testament Won’t Avoid the Need for Probate in Another State: If you own property in another state, those assets would also need to be probated in the appropriate court in that state. This is often referred to as ancillary probate. Not only will we will need to deal with the time consuming process in your home state, but we would need to go through this process in every state you owned property to distribute that property to your named beneficiaries. It may be necessary for your family to hire an attorney in the other state to help them with the probate process. One way to avoid this is to establish a Revocable Living Trust and transfer all of your property to the trust. This would not only avoid probate in your home state, but also any other state where you owned property.
3.) A Last Will and Testament Won’t Keep Your Assets & Beneficiaries Private: Because a Last Will and Testament must be submitted to the Probate Court prior to your executor being appointed, your Last Will and Testament, including information about your assets and beneficiaries, will be public knowledge. Remember, probate is a public process so that creditors can be notified of the proceedings and to allow other interested parties to contest your will. If the idea of having information available to the public about your beneficiaries and assets concerns you, you want to plan in a way that avoids the probate process.
4.) A Last Will and Testament Won’t Protect You if You Become Incapacitated: Since a Last Will and Testament only goes into effect after you pass away, it won’t guide us on who will be in control of your assets if you become incapacitated or incompetent. You will need a Durable Power of Attorney in case you are unable to manage your own financial and legal affairs and an Advance Directive of Health Care if you are unable to communicate your end-of-life decisions. One of the benefits of a Revocable Living Trust is that it will give guidance on what you want to happen in the case of incapacity AND death. A Revocable Living Trust will define what disability means to you and will let us know what conditions must be met for a successor Trustee to step in and manage the trust assets on your behalf if you are unable to do so due to incapacity or incompetency.
5.) A Last Will and Testament Won’t Protect Your Assets: If you are looking for asset protection, a Last Will and Testament won’t help you. While it’s possible to pass down asset protection to your beneficiaries through a Last Will and Testament by creating a testamentary trust (the trust is not created until your Last Will and Testament is probated), you still own your assets outright, making them available to your creditors and other potential threats to your estate. If you are concerned about lawsuits, you will want to make sure your assets are transferred to the right type of trust to protect your assets while you are alive.
6.) A Last Will and Testament Won’t Help You if You Need Long-Term Care: A Last Will and Testament only tells us who will be in charge of your estate and who will receive your assets after you pass away. But what happens to your assets if you need long-term care? One potential threat that most people don’t consider is the cost of care. According the the U.S. Department of Health and Human services, approximately 70% of Americans will need some type of long-term care prior to passing away. It is important to plan for how you will pay for this type of care before there is a crisis, but a Last Will and Testament will not help you qualify for the Federal benefits you might be eligible for if you need care.
If you have additional questions about what estate planning tool is the right one for you and your family, you are invited to attend one of our free workshops. To see available dates and to register, visit www.atlestateplanning.com/workshops or call us at (404) 267-1377.