The will has a reputation as being the gold standard for those who want to make their wishes known after their death, but in recent times this time-honored estate planning tool has been one-upped. Many people can get along fine without a will using the following tools, so read on to learn more.
Trusts: This word intimidates some, but creating and maintaining a trust instrument is really no more trouble than that of a will. A trust can address every issue that a will does, such as naming beneficiaries, appointing an administrator and more. The owner of the trust maintains complete control over it until they pass away, at which time the trustee takes over. The most obvious benefit of a trust over a will is the way that any inheritances pass from the grantor to the beneficiary.
With a will, the property must be probated and probate can take months to be complete. With a trust, the beneficiaries can take immediate possession of any property. It's important to know that any property addressed in a trust and also addressed in a will will be deposed of using the trust. For example, if you leave a prized antique car to uncle Bill in the will, but leave the same item to aunt Jill in the trust, aunt Jill wins the car. Another benefit of a trust is its privacy; the contents are private instead of public, as a will is. This feature could help reduce jealousy among heirs.
Transfer on Death (TOD): Many people have bank accounts and investment accounts that would ordinarily be either frozen or sent through the long probate process. A simple document signed by the account holder, however, allows the funds in an account to go to any designated person or persons. This maneuver is also referred to as payable on death (POD).
Don't be caught off-guard by the practice of banks freezing the funds from a deceased's accounts; you must take advance action to ensure that alternate arrangements have been made. A TOD ensures that the funds will be made available to a named person upon presentation of the death certificate, which might not become available until several weeks after the death. If you need funds before that time, for funeral or burial expenses, you must have a prepaid plan, an insurance policy or an alternate account set up in your personal representative's (executor's) name ahead of time.
Be sure to discuss these and other plans to help keep your estate out of probate with an estate planning attorney.