Attorney
Knowing what will become of your assets and making the grieving process easier on your loved ones will give you peace of mind during a time of uncertainty. If you’re considering whether to draft a will or establish a trust during the pandemic, each option has benefits and potential setbacks. Depending on your assets and who you’d like to pass them on to, you might need to create a trust, will, or both.
Is a Will the Right Choice for Me?
People with assets are generally advised to create a will. A will is the more straight-forward of the two documents and directs who should receive property that is in your name. Your will dictates your wishes regarding property distribution and provides instruction for the care of minor children. Without a will, your heirs may be forced to spend additional time and money dealing with the court since a judge will decide how to divide your assets.
A will is an excellent document that protects your wishes by allowing you to state who should receive your assets after you pass away. You can keep your assets out of the hands of estranged relatives to whom the court may give your assets if you die without a will. With a will, your loved ones can receive your property with minimal court involvement; the less the court is involved, the quicker they will get your assets. You can also choose to leave money to charity in your will.
A will is a standard estate planning document that works well on its own or as part of a trust. On its own, a will must go through probate, a legal process in which the court names an executor to carry out the will and oversee the distribution of your assets. Probate involves settling your debts with creditors, meaning that anyone you owe money to may be paid through your estate before it is divided among your heirs. Probate is also a public process, meaning that anyone can find out the details of your will and estate. This can potentially invite estranged relatives to contest your will.
Because the court is involved, probate incurs court fees. If you’re married and most of your assets are jointly owned, your will cannot accommodate those assets.
Why a Trust May be a More Useful Estate Planning Tool
Trusts are gaining steam as more people seek to protect what they amassed over their lifetime. Creating a trust allows people to avoid probate and keep their affairs private. A trust is a separate legal entity you set up to manage your assets. You can set one up at any time to make sure that your assets are used according to your wishes. Once you create a trust and place assets into it, the trust becomes the legal owner of the assets. The trustee determines how the assets are invested and to whom they are distributed when you pass away. When creating a trust, you must also name successor trustees to manage the trust when you become incapacitated or pass away.
Trusts are typically more costly and involved than wills, but long-term, they can provide several advantages. When you create a trust, you must retitle the assets you want the trust to protect. Once in the trust, these assets can skip the probate process, saving your loved ones considerable time and money, and keeping the court out of your affairs. Your trust is also able to keep the distribution of your assets private, meaning you can avoid having anyone contest your wishes.
Why You Should Have a Will if You Have a Trust
In general, your trust should be accompanied by a will because not all of your assets may be transferred to your trust before you pass away. There is also the chance that you may acquire assets before you get the chance to transfer them to your trust. With a simple will like a pour-over will, all remaining property that is not in your trust at the time of death may be transferred to it; however, this property will still need to go through probate.
In a Time of Crisis, Which Estate Planning Document is Right for Me?
Wills and trusts serve a common purpose: ensuring your estate is divided according to your wishes at the time of your death. Each one can be useful, depending on your situation.
When You Need Fast & Affordable Estate Planning, Create a Will
A will can be drafted more quickly than a trust, which is critical in an emergency. You can designate your beneficiaries without needing to retitle all the assets you want to place in a trust. If you become ill and are not sure if you will make a full recovery, or when, a will provides peace of mind in a relatively short time frame.
Additionally, it may be challenging to do all the legwork of establishing a trust during the pandemic, when many businesses are closed or have limited hours and capacity. If you’re part of the high-risk group, you may wish to limit your time spent traveling to and from law firms and financial institutions to set up your trust. On the other hand, you can create a will with relative ease and minimal contact with others.
If You Might Become Incapacitated, Create a Trust
Trusts provide more protection for people who become incapacitated. A trust is usually accompanied by a medical advance directive and a durable power of attorney. These documents empower people you trust to make decisions on your behalf regarding your healthcare and finances. You get to appoint someone to be your voice when you can no longer make decisions. If you become disabled due to a complication from COVID-19, a revocable trust may be a better option than a will since your successor trustee can step in and manage your assets while you’re still alive.
Make the Right Choice in Estate Planning with Clifford M. Cohen
When you need help deciding how to best approach estate planning in Washington, DC or Maryland, contact attorney Clifford M. Cohen. With over 35 years of helping people plan for the future, you can trust him to provide sound legal counsel regarding your estate plan. Call (2020) 895-2799 or complete our contact form for a free consultation.