As estate planning attorneys, we sometimes hear from a client that wants us to provide damage control. The individual does not know where to turn, because their last surviving parent passed away without any estate planning documents in place. There are things that we can do in many cases to mitigate the damage, but this is a tough situation that could have been avoided.
They say that the only two certainties of life are death and taxes. With this in mind, everyone is prepared to file their tax returns on or before the 15th of April. For some unknown reason, many of the same people do not even consider the matter of estate planning. They are avoiding something that is absolutely inevitable, and their family members pay the price in the end.
Studies have been conducted periodically to gauge the estate planning preparedness of adults in the United States. LexisNexis probed into the situation, and they found that 55 percent of Americans do not have wills or any other estate planning documents in place. The figure is lower among older Americans, but still, many people in their 50s and 60s have been totally remiss.
If you pass away without an estate plan, the condition of intestacy will exist. The court will step in to name a personal representative to act as the estate administrator. Subsequently, the final debts will be paid out of the estate’s resources, and the remainder will be distributed in accordance with the intestate succession laws of the state of Vermont.
It is likely that you would not approve of the way your assets are distributed if you die intestate. For example, if you pass away with a surviving spouse and descendants from someone other than that spouse, your spouse would not inherit everything. Your surviving spouse would receive half of the intestate property, and half of the remainder. Everything else would go to your descendants.
Action Is Required
As you can see, you must put a proper estate plan in place so that your true wishes will be carried out after you are gone to avoid intestacy. A last will is a possibility, but when you understand the facts, you will see that a revocable living trust is preferable in many ways.
If you use a last will as your vehicle of asset transfer, it would be admitted to probate. The court would be involved, and your loved ones that are named in the will would have to wait out a long, drawn out process. It typically takes about eight months to a year for a simple case to pass through probate, and no inheritances are distributed during this interim.
You probably do not want to see a lot of money go out the window that could have gone into the pockets of your loved one. If you feel this way, you may want to look for an alternative to a last will. Numerous expenses pile up during the probate process, including a court filing fee, the executor’s remuneration, attorney fees, appraisal charges, liquidation expenses including commissions, and incidentals.
These drawbacks are completely avoided if you utilize a revocable living trust as the centerpiece of your estate plan. You can act as the trustee and beneficiary while you are living, and you name successors to assume these roles after you pass away. In the trust declaration, you leave behind instructions to the trustee with regard to the way that you want the assets to be transferred after you are gone.
You have the ability to instruct the trustee to distribute assets incrementally; you are not required to allow for lump sum distributions. This is another advantage that a living trust provides over a last will. To prolong the viability of the trust, you could allow for a certain amount be distributed every month so the principal can continue to earn income and replenish the trust.
When the time comes, the trustee would follow your instructions and handle all of the estate administration tasks. The process of probate would not be a factor.
Let’s Get Acquainted!
If you do not have an estate plan in place, or if your existing estate plan has not been updated in a long time, you should definitely come to one of our estate planning seminars. Our firm offers free seminars, and there are a number of sessions being held in the near future. To get all the details, visit our seminar schedule page.