Most people are familiar with Wills.  A Will, often called a Last Will and Testament, is a legal document that expresses your final wishes for the disposition of your estate.  Preparing a Will will allow you to substitute your wishes for the ultimate distribution of your property in place of the state’s plan for your property.

There are things about Wills that make them a less attractive way to plan for many of our clients.  For example:

  1. Effective Date.  You may be surprised to learn that a Will is not effective when it is signed. It takes effect only (a) after your death, and (b) after a court has examined and approved the Will (a legal proceeding called “probate”).  For this reason, a Will only controls your property after the probate process is complete.
  2. No Protection From Disability.  Since a Will is not effective during your lifetime, your Will does not offer any help or protection for your property in the event you are unable to manage your property due to disability.  During disability, your property would be managed under a power of attorney (if you have one and if banks, brokerage firms, and other third parties agree to honor it).  If your power of attorney does not work, for any reason, your loved ones will have only one alternative – a living probate process called guardianship.  Guardianship is a legal proceeding in which a judge declares you legally incapacitated and appoints a guardian to manage your property under the judge’s direct supervision.  Guardianship is the worst possible way to manage your property, because your court-appointed guardian is required by law to report to the court at least annually to account for your property and is required to seek permission from the judge in advance in order to take other action on your behalf.
  3. Loss of Privacy.  Because a Will must be filed with a court to go through the legal process called probate, a Will ensures that your personal financial information and the identities of your heirs will become a matter of public knowledge.
  4. Governing Rules.  While a Will substitutes your rules for who inherits, it leaves your estate subject to the Government’s Rules that have the power to approve or disapprove your Will, to appoint an Executor, and the requirement that your executor comply with the myriad of other rules that are part of the probate process.
  5. Cost and Delay.  The real cost of Will-based planning must include the cost of probating the Will after your death, which can be $5,000 or more. It also puts your property at risk for management via guardianship during your life, which can easily cost $25,000 or more, depending on how long the guardianship is necessary.

For many people, Trust-based planning offers a more effective and efficient way to plan, in that trusts:

  • Are effective the moment they are signed
  • Can hold and manage property during your lifetime, thereby providing protection against the risk of disability
  • Keep your financial affairs private
  • Operate under your rules
  • Can take the place of Wills by distributing property privately after your death, eliminating the delay and high cost of property, as well as removing the risk of a costly guardianship during your lifetime

For more information on how Trust-Based Planning works, Click Here or watch the following video:

Will or Trust? You Decide