11/29/2021 | News release | Distributed by Public on 11/29/2021 09:43
Thinking about what will happen to your assets after you are gone is an important part of your financial plan. Creating a will or trust helps ensure your wishes are executed correctly. But, understanding what each document can mean for you can be confusing. Learn the difference between a will, probate and a having a trust below.
A will allows you to protect and distribute property owned by you at your death through a written legal document. By detailing who should inherit what, you try to ensure that your possessions are distributed according to your wishes, rather than state laws. Following are considerations specific to individual situations:
You're single
You're married
You have children
You have debt
Probate is a court process to provide for an organized way of winding up a deceased person's affairs. During this process, a personal representative or executor is appointed by the Probate Court to supervise the collection of your probate assets, payment of your final bills and taxes, and distribution of your assets according to either your will or the intestacy laws. This may or may not be what you intend and might be more expensive than if you made other plans in advance.
Having a will does not mean that your estate will avoid probate. Your will only affects property owned by you at your death. It typically does not affect property which is owned as joint tenants with rights of survivorship, which passes by beneficiary deed or designation, including "Pay on Death" or "Transfer on Death," or which is owned by a trust.
If you die owning property in your name without a will, your estate still passes through probate-but who receives your property will typically be determined under the laws of the state where your primary residence is at your date of death (the "intestacy laws").
There are ways to distribute your property at your death according to your wishes without going through probate. While the techniques might vary from state to state, these typically include:
The trustee holds the legal title to the property owned in the revocable trust, not you as owner. The trust property is held by the trustee for your benefit during your lifetime. You can choose to serve as your own trustee as long as you are able. At your death, the property held in the trust is distributed by the successor trustee of the trust to those family members, friends or charities you name in your trust agreement, similar to the instructions you can leave in your will.
There are many advantages to creating a living trust:
Your living trust would be part of your overall estate plan, which would likely include a "pour over will" (just in case assets weren't retitled into your trust's name at your death), powers of attorney for financial and healthcare decisions and a living will.
An estate planning attorney can discuss what estate plan is right for you. Your banker or financial advisor can also talk with you about your options and assist you with your financial goals, working together with your attorney and other trusted advisors.
Explore tips for protecting your financial future through the Protecting Health and Wealth playlist on the UMB Financial Education Center.
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