(Courtesy of Haas & Zaltz) This series often focuses on Revocable Trusts and the flexibility, continuity and protections that they provide. Of course, in addition to the foregoing benefits, trusts avoid the probate process, which can be lengthy and expensive in some states. While extolling the virtue of an Estate Plan based upon a Revocable Trust, practitioners may forget to explain that Wills play an important role in a comprehensive Estate Plan. I have vivid recollections of sitting across from numerous clients who asked me the question, “If I have a Revocable Trust, why do I need a Will?” This article answers that question.
Let’s start with the basics. If an individual dies without a Revocable Trust or Will, that’s referred to as dying intestate. Dying intestate occurs often enough that states have created statutes to address the issue. These state statutes determine distribution of your assets without any input from you or your loved ones. Many states’ intestacy laws give only a portion of assets to the surviving spouse and give the remainder to descendants, without regard for the specific needs of the individual recipients. This includes those who may have special circumstances, such as receiving needs-based governmental benefits. If you die intestate, then your estate will likely need to go through probate. An individual will petition a court for appointment as executor, personal representative or administrator, which will give that individual legal authority to collect and distribute your assets. That individual likely will need to retain an attorney to understand and navigate the complex court system. A judge oversees the many steps involved in this public probate process. As the probate process is public, otherwise private information about the nature and extent of the individual’s assets and to whom they are being left would be divulged. This could allow nosy neighbors, predators and others to pry into the lives of the individual and their loved ones.
Revocable Trusts provide the solution to the probate issue. They allow the family to forego the probate process altogether. The Trustor creates a Revocable Trust and appoints a Trustee to step into their shoes upon their death and administer the trust without court intervention. In this way, properly funded Revocable Trusts avoid probate. If, however, the decedent died with one asset titled in his or her individual name, that asset needs to pass through probate. Here’s the first reason that even if you have a Revocable Trust, you need a Will. Despite the best efforts of the client and the attorney who drafted the Estate Plan, assets sometimes remain titled in the name of the Trustor at death. In most states, the only way to ensure that these assets end up in the Revocable Trust is through the “Pour-over Will” that “pours” any assets passing through probate “over” to the trust. The Will acts as a backstop to the Revocable Trust. In addition, in the rare circumstance that the Revocable Trust is declared invalid, the Will can include provisions that direct passage of the assets in the same manner as was directed by the Revocable Trust.
Second, certain states allow their residents to pass tangible personal property through a separate writing without the formalities required of a Will. These documents need to follow state statutes concerning requirements for validity, but generally, these documents need only reference the tangible personal property sought to be distributed, the desired recipient of the property, and have the testator’s signature along with the date signed. Usually, states that allow a separate writing require that the Will contain a direction regarding passing the tangible personal property according to such document. These states typically do not have companion statutes that allow a Revocable Trust to reference the memorandum.
Finally, anyone that has minor children needs to have a Will. The Testator names guardians for the minor children in a Will, nowhere else. For most parents, deciding who will raise their children should they die while the children are minors tops the list of important considerations for an Estate Plan. Again, this nomination cannot be made in a Revocable Trust. The nomination for guardian of minor children upon the death of the parent can only be made in a Will.
Remember, most of the time, the Revocable Trust represents the gold-standard in Estate Planning. They contain flexibility, provide for continuity, avoid probate, and allow the Trustor to include protections and/or restrictions for their beneficiaries. It’s rarely, maybe never, wrong to create a Revocable Trust. Of course, the Trustor needs to ensure that they fund the Trust, otherwise, the assets pass through probate in accordance with the Will; however, that doesn’t negate the importance of the Will. As this article has demonstrated, Wills play an important role in a comprehensive Estate Plan. A Will serves as the sole legal document to accomplish certain things and failing all else, the Will serves as a backstop to the Revocable Trust. If you have questions about your Estate Plan, how it works, or whether it’s appropriately structured, now’s a great time to reach out to one of our qualified Trusts and Estates practitioners to review and update your plan.
To learn how to protect you and your family visit www.haaszaltz.com or call 845-425-3900. You can also email them at [email protected].
