If you believe me that there are better ways to plan your estate than simply with a will, the obvious question is, ok, so what are they?
Glad you asked!!
The first thing you have to do is to lose the mindset that there is any one “perfect” or “one size fits all” solution. For some reason when people promote or advocate for a tool, they always want to believe that it is universal.
I’m sure you’ve heard people tout the benefits of a will. I’m sure you’ve read or heard of the blurb marketing books or programs “Avoid probate with a living trust”, and so on.
All of these are wrong to the extent that what is promoted is a universally superior. The reality is that there is no such thing as a universal estate, there is no such thing as a universal estate plan. To try to use one method for every estate, for every kind of property and for every kind of desired disposition is simply delusional.
There are a lot of tools and methods that you can employ and the wise planner will pick and choose the ones that work best for a given situation.
With that in mind, we can take a look at options other than a will, bearing in mind that different options work better than others for a given situation. Let’s look at specifics.
While real estate can certainly be disposed of in an estate plan by will, there are better ways of dealing with it. One of the easiest ways to make sure that any real property you own goes where you want it to, quickly and with a minimum of hassle is simply by way of deed. All states allow various forms of real estate ownership, including joint ownership with right of survival. What does this mean for you? Simple. In the typical estate scenario where a married couple elects to have their home go to the surviving spouse, this is a no brainer. With respect to property titled this way, upon the death of one spouse, title immediately, and without any action or proceedings, goes to the surviving spouse. It’s that easy!! No deeds to be prepared. No probate with respect to the property. No waiting until probate is concluded.
What about when the second spouse passes away? What if you’re wanting to make sure your children receive the property? What if you’re single but want to leave property to some specific person. All ok and easily doable. Joint tenancy with right of survival is not limited to spouses. But if you can’t make it suit your needs, there is another option… the life estate. The concept is simple. You deed your property to someone, a spouse, a child, a friend….. whoever, but you retain a life estate. A life estate means that you are entitled to live in the property, rent it, raise crops, or whatever else you would like to do, for your lifetime. Upon your death, the life estate self-destructs and the property is owned outright by whoever you deeded it to.
Are you beginning to see a pattern here? Yep! The actual transfer, upon a person’s death happens automatically, quickly and easily. No one has to go to the probate court. No forms have to be completed. No accountings performed. No bonds to be posted. No waiting until the time for potential creditors to file claims. And best of all, no notices are published in a newspaper.
And no, these techniques are not limited to real estate. Bank accounts, annuities, titles to motor vehicles, interests in businesses, stocks, bonds…… all can be held jointly with someone else with right of survivorship.
And if form of ownership by itself does not accomplish what is desired, there are still other options. One of the most powerful tools for disposition of your assets, both during your lifetime as well as upon your death are trusts.
Trusts have a bad rep – people hear the word “trust” and their eyes glaze over. The common wisdom is that trusts are vastly complicated and expensive creations, catering to the ultra wealthy, having no place in the affairs of the average person. Nothing could be further from the truth. Trust are wonderful in terms of controlling, protecting and disposing of your assets because they are ultra-flexible. While there are some “one size fits all” generic trusts, in actuality you can create a trust to do just about anything you would like with your assets. In the next few posts we’ll talk about trusts and not only how you can use them, but how you can do it without breaking the bank.