When you die your property can be transferred by your Will, revocable trust, or to a joint owner or designated beneficiary. In part one of this series we will examine Wills and Revocable Trusts. Later in the series, we will examine joint ownership, beneficiary designations, and life insurance.
A Will is the basic instrument that controls how your property will be distributed at your death. Your Will gives you the opportunity to clearly express how you want your property distributed when you die. You will name an executor in your Will. The executor’s job is to carry out your wishes as set forth in your Will. Your executor will pay the debts of your estate and then distribute your remaining assets according to your instructions.
Will beneficiaries are typically family, but you may choose to name friends or charities. You also have the option to leave property to your beneficiaries outright or in trust. A trust created under a Will is known as a testamentary trust. Testamentary trusts allow you to control when and for what purposes your beneficiaries can inherit your assets. The assets that are transferred to beneficiaries under your Will are subject to probate.
Probate is the legal process of administering an estate. Probate requires filing documents with the Clerk of Superior Court listing beneficiaries of the estate, an accounting of all the property of the estate, and debts of the estate, among others. Many people wish to avoid probate because these documents are available to the public. You may want to avoid probate to keep personal matters of money, assets, and inheritances private. The probate process also involves court costs and can sometimes become a prolonged process.
One way to transfer property at death and avoid probate is with a revocable trust. Assets transferred into a revocable trust during your lifetime are not subject to probate. Property transferred into the trust is owned by the trust, not you. Thus, at your death, property owned by the trust is not subject to probate.
Your revocable trust will contain the distributive provisions that would otherwise be found in your Will. Revocable trusts are essentially Will replacements. You will still have a Will, but most of the provisions relating to your beneficiaries will be found in your revocable trust. The trustee you name will distribute your property according to the directions in your trust. This is the same concept as the distribution of your property according to the directions in your Will by the executor. The ability of your trustee to transfer your assets outside of the probate process adds flexibility and privacy to the administration of your estate.
An estate planning attorney is a great resource to answer any questions you may with regarding what will happen to your property when you die. If you do not currently have an estate plan or would like to have an attorney review your current estate plan, you should schedule an appointment to meet with an attorney.