This article is intended for educational purposes only and is not legal advice. For guidance on your personal situation, please contact a lawyer.
When planning for your family's future after you're gone, it can be tempting to think a will is all you need to pass your assets to your family. That can be especially true if your estate is neither vast nor complicated.
A last will and testament is indeed a useful and binding legal document, long a traditional means for allocating assets, assigning guardianship for minor children, and specifying other last wishes.
But is it the best way? Estate planning can also involve tax implications, the particular needs of heirs and your strategies for meeting them, and just how quickly and easily assets can be transferred. It can be worth considering other tools to use instead, typically in combination with a simple will.
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First, we'll look at some of the limitations of a will and then at a couple of useful additions or alternatives for your estate planning.
Some downsides of wills
A will often must go through probate, a court process that authenticates a will and allows the executor to distribute the assets. This can be a lengthy, costly, and, last but not least, public process, during which time the money and property might not be accessible to your heirs.
That can take months or years in some cases. Yet although laws and processes can vary among jurisdictions, the American Bar Association says most probate proceedings are neither prolonged nor expensive.
Consider living trusts or joint ownership
One tool many people use in combination with a will is a living trust. A living trust is a legal document that allows you to place your assets into a trust while you're still alive. A trustee then administers the trust per your wishes. They're private, and by the way, you can be your own trustee. Most of the time, people write wills that simply put any remaining assets into the trust after their death, just in case they missed moving any of their assets during their lifetimes.
Living trusts are also known as revocable trusts. That means they can be amended or even revoked along the way. Things change, after all, and the flexibility to respond might be the tipping point between a trust and will for some or all of your material wealth.
Joint ownership is another option, particularly for spouses. One widely used arrangement is called joint tenancy with right of survivorship. Assets owned jointly transfer directly to the surviving owner without the need for probate. An example is when one partner dies, and the other keeps the house and can stay there if they choose.
Tailoring your estate plan to meet your wishes and their needs
Again, state rules vary, and so do the size and complexity of each individual's assets and personal concerns and preferences. Consulting with a trusted estate planning professional can help you decide what mix of wills, trusts, and joint ownerships you should use. Together, you can create a plan that respects your wishes while maximizing the benefits and minimizing the complications for your heirs.
