Estate Planning: You have Your Estate Docs. Now what?
You have taken the first steps of having your initial estate documents drafted and executing the same. So, is that it? Almost … but there are a few other things for you to consider.
Some clients choose to have only a Will prepared, as opposed to a Will and Trust combination. Having a will does not avoid the need for a probate, but it does let the Court know whom you want to appoint as your personal representative, whom you want as your beneficiaries, and your other wishes included in the Will. So, it is helpful. And, there may be times where a simple Will, without more, makes the most sense — such as with clients who have the bulk of their assets in another country.
Just be aware that your US estate will still need to go through probate, and it is through that lawsuit that the Court will provide all appropriate authorizations and transfers.
Will + Trust Combo
This is the combination HLA tends to recommend in most cases because it generally allows you to avoid your estate going through probate at all. That said, there can be some extenuating circumstances of which you should be aware.
Third Party Providers – As a general disclaimer, bear in mind that banks, annuity companies, insurance companies, retirement funds, etc. are private third parties that have their own rules. It would not be possible to anticipate the policies and procedures of every company out there, but we will try to give you some general guidance.
The most seamless option would be to establish a bank account in the name of your trust. That way, when you pass away, the successor trustee should be able to simply take over, and nothing else changes.
If you resign as trustee prior to your death, then the process is even simpler still. Absolutely nothing would need to be done after your passing. A trust, like a company, does not die. So, as long as you have an authorized person in place, your passing should have not effect on the Trust’s bank account.
If you find it convenient to have a personal bank account, then your estate (i.e. your Personal Representative) will need to deal with the bank’s rules regarding the beneficiary(s). Hopefully, it will be a simple matter of presenting a Death Certificate and a copy of the estate documents (i.e. Will and Trust).
Annuities, Retirement Accounts, Insurance, etc.
These types of accounts generally ask you to name a beneficiary(s). Most often, the beneficiary(s) you name on the account will be the same as in your Trust. In that case, there may be no reason to do anything.
If, upon your death, the account will simply cash out and be paid to your beneficiary(s) – and assuming that is what you want to happen – then you are probably all set.
Caveat: It would be wise nonetheless to double-check with your account manager and let him/her know about your new estate documents.
On the other hand, if you have set up an account that will continue after your death – as opposed to being cashed out (i.e. liquidated) – then you probably will want to make some changes while you are still alive.
For example, you may want to change the beneficiary(s) you named previously to the account by substituting in your Trust as the beneficiary. That way, the benefits will flow to your Trust and be managed or dispersed by your Trustee.
Also, for continuing accounts, there could be other complications, such as determining who will have authority to direct the account manager, make certain decisions, etc. More than likely, you will want your Trustee to take over this role. In order to know what needs to be done to make that happen, you will have to talk to your account manager or representative.
The one thing you do not want to do is leave some loose thread that will require a probate to resolve, even though you have gone through the trouble of setting up a Pour-Over Will and Trust.
At HLA, we believe that just about everyone should have a Will and Trust as basic estate planning, so we strive to make that set up very cost-effective. Obviously, the low, fixed rate does not include anything beyond drafting your estate documents and presiding over execution.
If you would like some help tying up other loose ends, such as those described herein, we are happy to do so.