Dying without a Will or Trust in place could spell disaster. Not for you, obviously, but for your spouse, children, and other beneficiaries. The consequences of dying without a Will or Trust in place, start with your estate being subject to the intestate laws of the state in which you reside. It also means that your estate will be processed publicly. Your assets will be known to the world. Your beneficiaries will be publicly listed. Your creditors can make public claim on your estate. The big cases get plastered all over the media. The late greats like Aretha Franklin, Prince, Kurt Cobain, Tupac Shakur, and many others. They get the air time, probably because they are famous, wealthy, or it is just so shocking that they failed to establish an estate plan. However, many families across America have to navigate these difficult waters every day. Avoid the consequences of dying without a Will or Trust by simply creating one.
Dying Without a Will – How a Will Helps
With a Will in place your estate still moves through a public process known as Probate. Even with the public administration, the benefits of creating a Will over dying intestate are many. For one, you preselect your heirs and beneficiaries according to your wishes and not according to some state statute. (Note: surviving spouses and underage children will always be entitled to something in most states) This gives you freedom to change standard distribution patterns. Second, you preselect who will be in charge of your estate. Rather than let anyone ask the court for the right to administer your estate, by predetermining your executor, you place someone in charge that you trust. Third, and rarely discussed, you can nominate a guardian for your underaged children. Lastly, when you create your Will with the assistance of a lawyer, you should receive additional advice on how to make some assets avoid probate altogether.
Keep in mind, using a Will does not avoid the public nature of your estate’s administration. Nor does it avoid the costs of that administration. Estates valued over $40,000.00, must go through a full probate process under Missouri law. This process typically takes about 9- to 12-months and attorneys earn a fee that is based on the size of the estate. Keep in mind, the more difficult the case, the longer probate can last. Beneficiaries do not receive their inheritance until the probate case is concluded.
Dying Without a Trust – How a Trust Helps
Trusts, and their various forms, are one of the best estate planning tools for a lot of reasons. The importance of each of these reasons is truly in the eye of the beholder and this list is not exhaustive.
First, a Trust is a probate avoidance tool. Properly drafted, structured, and funded, an individual can completely avoid the probate process in most cases. Some clients will still have a few things that ‘slip through the cracks,’ in which case a small estate could be opened. When this does occur, a Trust is normally accompanied by a pour-over will, in which case, the only publicly listed beneficiary is the Trust itself. By avoiding, or at least minimizing probate, the decedent’s estate avoids the public nature of probate.
Second, like a Will, in a Trust you select who will administer the estate after you pass (or in some cases, while you are living). You would still nominate a guardian for minors in a pour-over will and/or a standalone nomination of guardian.
Third, a Trust is effective immediately. The person(s) making the Trust can begin transferring assets to the Trust as soon as it is created. This can be a great asset protection mechanism for individuals with personal savings, personally held investments, business owners, and people concerned about other liabilities. Since the Trust is effective immediately, and the Trustor has appointed someone they trust to manage it in their incapacity, it can also be a great tool for managing your finances in the event of incapacity in the future.
Fourth, a Trust allows the Trustor to control their assets beyond death. An estate planning attorney can craft provisions that protect beneficiaries from creditors, divorce, substance abuse, age, and disability. People with young children often want to extend their children’s inheritance out beyond 18 or 21 years of age. You can draft the Trust to make major gifts well into the future while also supporting beneficiaries when they need it.
Lastly, expenses of administration. While there may still be the need to hire an attorney to assist with the administration of a Trust, these expenses are typically lower than those incurred in Probate. Since the process is administrative and private, the Trustee will handle a great deal of the work.
Conclusion: Consequences of Dying Without a Will or Trust
While the estate size for many of these highly publicized celebrities may be much larger than any of ours, we can still learn an awful lot. Unfortunately, most of the lessons are not positive ones. We recently published an article about Prince’s estate and how his heirs, two years later, are still suffering through the Probate process and the only money being distributed is to the bankers and the lawyers.
If you are ready to make a Will or Trust, give Welch Law a call at (636) 352-1222. If you still have questions, please review other articles and contact us if you have additional questions or are ready to get your estate plan in place.