Wills and Trusts
While Wills are useful in certain situations, the Will is often the least important document in the Estate Plan. There are usually more efficient ways to distribute assets. Assets not owned jointly can be distributed through Trusts or institutional beneficiary forms. Assets owned by Trusts render the Will irrelevant for those assets, because the Trust terms dictate the distribution terms. When assets cannot be held in Trust, beneficiary forms act as the “Will” for these assets. In fact, if the beneficiary designations conflict with the Will, the beneficiary forms control. The Will is used to distribute an asset only if the asset was not jointly owned; was not held in Trust; and had no living beneficiaries named.
If the Will is relied upon to distribute an asset, then the Will must be probated. Probate is the legal process by which a Will is “proven” valid, and a Personal Representative is appointed to take actions in accordance with the Will. Probate can take many months and cost considerable money. Except in certain client situations, avoiding Probate is generally preferable. Avoiding Probate means not relying on the Will to distribute assets. A thoughtful Estate Plan will leverage beneficiary designations and Trust ownership to avoid Probate.
Wills still have utility, however. Wills specify one’s disposition of remains and certain personal assets in case of any family disputes. Parents of minor children need a Will to name guardians for their children. Further, people seeking to protect assets from a nursing home may benefit from a long-term care planning technique involving the use of Wills and Probate. Thus, everyone should have a Will, even though other documents will generally be far more important to planning.