When it comes to estate planning, nothing beats the gold standard: the will. This useful tool should be considered as only one part of a successful estate plan, however. Wills don't have the power to do it all, and some estate needs are better fulfilled using alternate means. If you are contemplating the creation of a comprehensive estate plan, read on to learn about why a will may not always be enough.
Designations and trusts can create a better beneficiary flow
Some of your property can be designated to go directly to your beneficiaries without having to go through probate. While probate is not inherently "bad," it does take time and has other negative connotations. All of the below financial actions automatically override a will, even if the same property is explicitly mentioned in the will.
Trusts: This legal structure is somewhat like a will, in that a trustee is appointed to oversee it after the owner's death just like an executor would and beneficiaries are specified. The two major benefits of a trust over a will are:
1. Probating trusts and the property in it is unnecessary. All property contained within the trust goes directly to the beneficiaries with the presentation of a death certificate.
2. A trust is entirely private. Wills are public documents; with a trust, even the beneficiaries don't necessarily know what the other beneficiaries are receiving. This feature alone can help alleviate some contentious situations caused by the appearance of unfair inheritances.
Deeds: Names can be added on to existing deeds allowing automatic ownership once the other deed holder passes away. These are called "rights of survivorship" in some locales.
Transfer on Death: These designations, also called "payable on death," allow the smooth and quick transfer of bank accounts and investments accounts to anyone listed on the form provide by the financial institutions. You may designate as many people as you wish to receive an equal share of the funds in the account. For example, if you wish your 4 children to take possession of the funds in an account upon your death, the funds will be divided 4 ways and transferred to them upon presentation of the death certificate. Caution: the death certificate may not be available until weeks after the death, so make sure that no one is relying on those funds to provide for burial and funeral arrangements. Take care of that using a life insurance policy or advance arrangements with the funeral home.
To learn more about these and other alternate means of addressing estate property, contact an estate attorney.