Will, Trust and Probate : Introduction

All of us work hard to maximize our income potential and secure the financial future of our family. But how many of us complete the necessary planning to ensure these hard-earned assets reach our family if an unfortunate event takes our life? Isn’t it a shame when the family of a six-figure income earner has to resort to GoFundMe after that person passes away? This happens because the family members often do not know the details of the assets the deceased had, or they miss out on their rightful ownership.

In this article series, we will discuss topics related to Wills, Trusts, and the Probate process. Here are the areas we will cover:

1. Last Will, Trust, and Probate
2. Contents of a Last Will
3. Probate and Non-Probate Assets
4. Trusts and their Types
5. Trust with Pour-Over Will
6. Living Will and Power of Attorney
7. Funding the Trust

Last Will, Trust, and Probate

A Last Will is a document where I can specify who should inherit my assets after my death. I can also mention the people who will take care of my minor children.

But a Will alone does not guarantee smooth transfer of assets in the USA. Many assets still need to go through the probate court system. The probate court validates the Will, ensures the debts of the deceased (if any) are paid, and then allows the assets to be transferred to the beneficiaries. Some assets, however, such as life insurance with named beneficiaries, joint tenancy property, or retirement accounts with beneficiary designations, may bypass probate.

The probate process can be time-consuming and costly. In some states, it may take several months, while in others it can extend to multiple years depending on the complexity of the estate.

A Trust is often used to avoid the probate process. By creating a Trust and moving assets into it, the appointed trustees can legally transfer assets to family members without involving probate courts. It is important to note that the Trust must be funded correctly. Assets have to be retitled into the Trust for it to serve its purpose.

Contents of a Last Will

My Last Will contains my wishes about how assets should be distributed after me and who will take care of my minor children. Let’s discuss two important roles.

Executors

Executors ensure that my assets are distributed to my beneficiaries according to my Last Will. If my estate must go through probate, the executors work with the court system throughout the process. They are usually the ones who register the Will with the probate courts and initiate the proceedings.

I can nominate one or more executors. It is better to appoint the main executor who lives in the same state, since it is not practical for someone far away to handle the lengthy probate process.

Guardians

Guardians are responsible for minor children. If something happens to both parents, the state’s child services are obligated to take custody. Once the state steps in, the children must legally be brought back to the family, and in the meantime, they may go through the foster care system.

We can specify primary and successor guardians in the Will. Although family members from the home country can be listed, it is better to name a primary guardian who lives in the same state where we reside in the USA.

Guardians and Executors can be the same person, but given the effort involved, it is usually wise to appoint different people. A family member or friend who can handle financial matters can serve as executor, while another who can provide a comfortable home can be guardian.

That’s a wrap for this week. Happy Learning!