Abraham Lincoln once said, “You cannot escape the responsibility of tomorrow by evading it today.” So, are you surprised to learn that our 16th president—who also was an accomplished lawyer–died without a will?
Lincoln is just one of many famous Americans to pass away without clear legal directions for their estates. In more recent high-profile deaths, celebrities like Aretha Franklin, Phillip Seymour Hoffman, and rock star Prince died without wills. It is safe to assume they all had attorneys and financial advisors, but for whatever reasons, they chose not to have their final wishes put into legal documents. Those decisions came at a huge cost to the family members left behind.
When someone dies “intestate” – meaning they do not have a will — probate courts must get involved, first to settle the deceased’s legal obligations (such as paying outstanding bills), and then to determine what to do with his or her remaining assets.
Without a will, the probate and succession laws of that state go into effect to decide how the deceased person’s assets should be distributed. In the absence of direct heirs, the court has the power to determine how they believe the deceased probably would have wanted to disperse his or her assets. That process includes identifying living relatives of the departed, starting with a spouse and adult children, and if necessary, reaching out to nieces, nephews, cousins, and others. Those scenarios frequently lead to legal arguments – even more so in the case of a large estate.
In addition, the constant legal fees keep piling up throughout those processes, especially if there are disputed claims about the estate.
Of course, the toll of probate court on living family members certainly is not limited to the wealthy. According to AARP, 60 percent of Americans do not have a valid will or trust. If you die without making arrangements or preparing a will, your estate inevitably is subject to probate’s slow, costly, and public process.
Do you want the court to make your decisions?
A properly prepared last will and testament enables you to clearly specify in advance how you would like your assets distributed, and to whom, saving your loved ones the painful involvement with probate. Your will also can be modified and updated regularly to reflect changes in your property or your designated heirs.
One smart strategy for avoiding probate is to establish a living trust. A living trust essentially works the same way as a traditional “last will and testament” in the sense that you – while you still are alive – get to legally decide what will happen to your property when you pass on. An appointed trustee is responsible for the estate but still is bound by the parameters of your trust agreement. That means you have opportunities to write down and certify who receives what assets when your estate later is transferred to your dependents, heirs, charities, etc.
A living trust only takes effect after you die, and it avoids the expensive and time-consuming probate process, because your appointed trustee serves the role of the will’s executor by fulfilling the wishes you wrote into the trust. Having such a plan also will ensure that more of your estate goes to your inheritors and not the courts.
Just as importantly, the trustee can make decisions regarding your property if you become incapacitated from illness or injury. You may have made certain prior requests about dispersal of your assets upon your death, but if you still are alive and unable to manage your affairs capably, your trustee can then take responsibility for awarding those behests to the eventual beneficiaries as you would have wished.
There are various types of living wills, and many related ways for them to address such issues as taxes, retirement accounts, and life insurance. An estate planning attorney can explain the differences to you.
Make plans before it is too late
Abe Lincoln did not know his life would be cut short, but who does? It is critical to have a comprehensive estate plan in place, regardless of your assets or income level. By designating which family members will inherit your possessions, you will spare them the pain and expense of a probate fight when the time comes.
The experienced elder law attorneys at Cordell Planning Partners provide smart solutions for estate plans, wills, trusts, Power of Attorney documents, and other safeguards for your assets.
Cordell Planning Partners also offers free educational workshops where we explain the various asset-protection programs, all in terms that are easy to understand.
To learn more, contact us today. You also can arrange to have a free one hour estate planning analysis to discuss your individual planning priorities.