We find that many people are surprised when they learn about the limitations and drawbacks that go along with the utilization of a last will as a primary asset transfer vehicle. One factor that you may not be aware of is the probate process. When a will is used, it must be admitted to probate, and the court provides oversight while the estate is being administered by the executor.
If you are like most people, you would like your loved ones to receive their inheritances shortly after you pass away if it is at all possible. This will not happen when a will is admitted to probate, because it does not run its course overnight. Inheritors do not receive anything until the court has closed the estate, and it can take about a year, even if there are no particular complications.
This is one drawback, but there are a few others that you should be well aware of before you make any final decisions. Probate is not free by any stretch of the imagination. The court will charge a filing fee, and the executor is entitled to payment for his or her time and effort, and the time commitment can be considerable.
Since probate is a legal process, the executor will often engage an estate planning attorney, and this adds to the debit ledger. Final taxes must be paid during probate, so an accountant can be brought in as well, and there will typically be appraisal and liquidation charges.
When you add in the miscellaneous expenditures, you are looking at a significant chunk of change. The money that is spent during probate is essentially coming out of the pockets of the heirs to the estate. In addition to the time and money, probate opens a window of opportunity for disgruntled parties that may want to contest the validity of the will.
Another major pitfall is the loss of privacy. Probate records are available to the public, so anyone that is interested can find out how you decided to transfer your resources if you use a will to state your final wishes. This can cause acrimony under some circumstances, and in a more general sense, the loss of privacy can be disconcerting.
Last Will Alternative
If you were to use a living trust instead of a last will, all of the above negatives would be completely washed away, because the asset transfers would not be subject to probate.
You don’t have to worry about losing control of assets in a living trust, because this type of trust is revocable. If you ever change your mind and want to dissolve the trust and take back direct personal ownership of the property, you can do so.
Plus, you can act as the trustee and the beneficiary while you are alive and well, so you are completely in charge every step of the way when the trust is intact. In the trust declaration, you name successors to assume these roles after you are gone.
Choosing a Living Trust Trustee
It is important to be very discerning when you are selecting a trustee for your living trust. There are legal guidelines that must be followed correctly, and the trustee should have a great deal of financial acumen. The administration tasks can be quite demanding in some instances, so the trustee must be ready, willing, and able to devote a good bit of time as well.
Since there could be multiple beneficiaries, you have to be concerned about potential conflicts of interest if you name someone that you and your family members know well. Anticipated longevity is another factor that should be taken into consideration.
If you do not know anyone that would be a suitable living trust trustee, you do have recourse. There are companies that provide fiduciary services, so you can engage a corporate trustee to be certain that everything is done in accordance with professional standards.
Of course, there will be an expense involved, but it can be the right choice when certain circumstances exist and the assets in the trust are considerable.
Attend a Free Seminar!
Since you are on this website, you must be looking for estate planning information, and you can certainly find a lot of it right here. This being stated, if you would like to take your knowledge to another level, attend one of our upcoming seminars.
There is no charge to attend these sessions, so you have everything to gain and nothing to lose. To see the schedule, visit our seminar page and click on the date that interests you to obtain registration details.
- What You Need to Know about Planning for Elder Care - March 21, 2023
- Can a Trust Be Contested? - March 16, 2023
- Ohio Medicaid Limits for 2023 - March 14, 2023