Which type of estate planning device is best for me? Are wills & trusts essential? What are the advantages and/or disadvantages of having no estate planning, a joint savings or checking account, a will or a revocable living trust?
If I have no estate planning tools, how will my estate be distributed? After my death, they would be distributed strictly according to the intestacy laws of the State of Florida. Having no estate planning tools is self defeating, in that upon my death, my estate will automatically be distributed in a certain format that I would have had no control over. Additionally, if none of my living heirs can be traced, there is a possibility that part or all of my estate could lapse to the State of Florida.
With a joint savings or checking account, with “rights of survivorship,” upon my death, “my interest,” will automatically pass by operation of law to the other joint account survivor. While this has certain advantages, such as having immediate access to the funds in the account, a joint account is totally ineffective should a mutual or joint disaster befall both of the joint owners of an account, and no supplemental estate planning devices exist.
While on the face value, a will is one of the most economical estate planning tools that an attorney can draft, statistically, the costs of probating a will could cost the estate between eight to twelve percent of a person’s gross estate. Additionally, the probate process is time consuming and the proceeds from a person’s estate may not be distributed for months or even years. Finally, a will is a public document for all to inspect.
If there are so many disadvantages to having absolutely no estate planning, “joint assets” or having a will, is there another alternative? Yes, a revocable living trust, while more expensive to prepare from the onset than a Will may actually be one of the most “cost beneficial” estate planning device. Unlike a will, a trust will ensure that one avoids the costs and publicity of the probate process. Additionally, via a trust instrument, the proceeds of a person’s estate can either be preserved, or distributed immediately, without court intervention. Finally, with a trust, the Settlor, or Trustee has the most freedom in his or her power to direct the distribution of trust assets immediately.
A living trust can be a practical alternative to a will for many middle-income Americans. This practice is becoming more and more popular. One should consult with his or her attorney in order to ensure proper and cost effective estate planning.
COURTESY OF SOKOLOFF & WEINSTEIN, P.A., ATTORNEYS AT LAW, IN ROYAL PALM BEACH.
(561) 790-6788 / 790-4505