If you’ve been putting off making an estate plan, including a will or trust, now is the time. It is crucial to stay prepared and easy to get started writing a will. Procrastinating about your future is a risky endeavor. Understanding why you need a will is the first step to getting started. Learn why it’s essential to avoid dying without a will and how wills and trusts can protect you and your loved ones from a very public free for all type of spectacle.
Dying Without a Will
If you die without a will, the court says you died “Intestate.” Dying intestate means that you have no will, so your estate distribution follows North Carolina Intestate Law. Your estate will go through probate, and all the world will know:
- what you owned
- what you owed
- who got what
Your mortgage company, car loan company, and credit card companies also seek payment on balances you owed at the time of your death. This public process after your death may cause embarrassment or shame for your family who is left. At the very least, knowing all about the intimate details of your life can shock your family and friends. Your assets go through inventory by the administrator of your estate and are publicly listed in probate court. Your digital assets are part of your estate, so pictures, journals online, social media account messaging, and other private information can easily become a public free for all.
In addition, the intestate process that dictates who gets what is not what you think. Intestate law decides who gets what and when.
- If your only heirs are your children and you have not provided any instructions, state law will mandate dividing up proceeds equally.
- If you have a spouse and parents, they may receive equal shares of your estate.
- Your older children will get their shares immediately if they’ve attained adulthood.
- But, the court will appoint a guardian to manage the money for your minor children until they become adults.
- Shockingly, that guardian can charge a lot of money and be a total stranger – as can the guardian who raises your child.
Yes, if you die without a valid will, the court, not you, will decide who raises your minor children.
Remember that since your death is public, it’s not uncommon for predators (fake creditors) to come forth and make demands for payment – even if your estate does not owe them anything. The bottom line? Dying intestate allows state law and the court to make all the decisions on your behalf – regardless of what your intent might have been. Publicity is guaranteed.
Dying WITH a Will
If you die with a valid will, your assets will still go through the probate process. However, after your estate pays creditors, the remaining assets go to whom you’ve identified in your will. Even with a will, though, probate is a public process. Public news of your death may still bring in predatory creditors.
- If you want to leave money to your children, you can do so in your chosen amounts.
- If you name a guardian for minor children, the court will usually abide by your wishes.
- You may specify giving assets to a charity, your Aunt Betty, or your neighbor.
The bottom line? While a court oversees the process, having a will allows you to tell the court exactly how you want your estate handled. However, probate is always a public process.
Dying WITH a Trust
If you’ve created a trust before death, you’ve taken control of your estate plan and your assets. Trust assets are not subject to the probate process. One of the most important benefits of trusts is that they are private. Notices are not published, so you avoid predators coming after your estate.
Your named trustee manages your estate with specific instructions on how your assets should be dispersed and when. However, you must fund your trust to bypass probate. Funding means that you retitled your assets in the name of your trust. Your trust is a framework that holds your assets. You must put your assets into the trust for either to have value.
One of the primary advantages of a trust is that your estate bypasses the publicity, time, and expense of probate. Probate is the legal process by which a court decides the rightful heirs and distribution of assets of a deceased through the administration of the estate. This process can easily cost thousands of dollars and take several months to more than a year to resolve.
Of course, not all assets are subject to probate. Some exemptions include:
- Jointly owned assets with rights of survivorship
- Life insurance beneficiaries
- Annuities
- Retirement accounts
- Payable upon death or transfer on death accounts.
Even with a trust, you still need a will to name guardians for any children. A pour-over will puts any assets into trust that you inadvertently or intentionally left out of your trust at death. Pour-over wills ensure that all of your assets are placed in trust and don’t face probate. A trust gives you the power to name what will happen without a court’s interference. Creating a trust can provide ongoing financial support for a child or loved one who may not ever manage these assets on their own. Through a trust, you can designate someone to manage the assets and distribute them to your heirs under the terms you provide.
Windfall Inheritance Issues Solved
Giving an inheritance to an heir directly and all at once may have unanticipated ancillary effects, such as disqualifying them from receiving some form of government benefits, enabling and funding an addiction, or encouraging irresponsible behavior that you don’t find desirable. A trust can also come with conditions for distribution, such as graduating college or passing drug tests for one year.
If You Can No Longer Make Decisions For Yourself
Furthermore, if you ever become incapacitated, your successor trustee – the person you name in the document to take over after you pass away – can step in and manage the trust’s assets, helping you avoid guardianship or conservatorship (sometimes called “living” probate). This protection can be essential in an emergency or in the event you succumb to a severe and chronic illness. Unlike a will, a trust can protect against court interference or control while you are alive and after your death.
Trusts Take Estate Planning to the Next Level
Trusts are not simply just about avoiding probate. Creating a trust can give you privacy, provide ongoing financial support for loved ones, and protect you and your property if you cannot manage your own assets. Simply put, the creation of a trust puts you in the driver’s seat when it comes to your assets and your wishes instead of leaving this critical life decision to others, like a judge.
There are many advantages to having a trust rather than a will as the centerpiece of your estate plan. Only a trust provides comprehensive management of your assets in the event you can’t make decisions for yourself and also after your death.
We Can Help
Living or dying without a will is just not wise. If you need a will or trust set up to prepare for emergencies, see us at Hopler, Wilms, and Hanna. We work with you every step of the way to design an estate plan that will work best for you and your family. Once you get started, you’ll see it’s not difficult to make plans for your future. And who wants to go through life unprepared for emergencies? Contact us today and find out how we can help you and your family feel safe and secure.