Yes, you read that right. Often people's estate planning mindset is that they just need to have a will. However, most people make the mistake of not asking the essential question of “Why do I need a will”? A will is nothing more than a probate document that is designed to go through the probate system.
In simple terms, a will guarantees that:
your estate will go through the court system
your assets and liabilities become public record
your heir(s) receiving their assets will be delayed due to the fact that your estate will pay legal fees and court cost and will then be open to claims from creditors
Most people are not aware there is a very common and a very easy-to-use alternative to the probate system. It is called a Trust Agreement. Although there are many types of trusts with many different uses, they all function in a similar way in avoiding the probate system.
How a Trust Agreement Works
By executing and funding a trust, a person essentially transfers their ownership of all of their assets (real estate, bank accounts, investments, business interest, vehicles, personal property, etc...) to the trust. Generally speaking, the person forming the trust (known as the Grantor) still has complete access to the assets of the trust while they are living so there is no need to worry that you will not be able to use your property (this is not the case for irrevocable trust).
When you pass away, your trust document will name a successor trustee, a person to carry on management of your assets after you are gone. From there you can give directions to your successor trustee just how you want your property distributed and who will receive it.
Having a properly funded trust allows you to have the final say in what happens to your property. It also guarantees that your directions will be followed and that the Probate Court will not be involved. A properly funded and drafted trust will help keep your family out of conflict and out of court so that your legacy will live on without the fear of your heirs fighting over assets.
To find out how you and your family could benefit from a trust agreement, book a free family wealth planning session with our office to discuss your options!