It’s easy to plan your life while you’re still roaming this planet. Putting together a grocery list for tomorrow night’s dinner; booking a flight for a vacation you plan on taking in a few months, or even setting financial goals that you expect to achieve 5-years down the road—these are all relatively painless plans to make and keep.
But planning for what happens if you die or become incapacitated. Well, that’s heavy…
Not only is the topic itself a heavy one, but the jargon that goes along with estate planning can be confusing at best—and downright overwhelming at worst. Wills, living trusts and irrevocable trusts, power of attorney, advance directives…the list goes on. Furthermore, there is a lot of misinformation out there making matters worse. There are do-it-yourself wills available online, horror stories about dying without a will, and the impression that an “estate” is something that only the richest of rich people have.
As paralyzing as the topic of estate planning may feel, we promise it’s a lot easier to wrap your head around it than you may think. Here are 7 simple truths (and untruths) about estate planning:
1. I don’t have a lot of money. Do I need a will? In short, yes. If you own anything, then you probably should have a will. A will simply outlines your wishes for the distribution of your property—including digital assets—after you die. It will ensure that your money—or your car, or your collection of vintage cameras—goes to the people you want to receive them and not the people the court will select in the absence of a will.
2. What happens if I die without a will? If you die intestate—meaning, without a will—then the probate process begins and the courts will determine the distribution of your assets based on the intestacy laws of the state. Most often assets will be passed on to a spouse, children, parents, or siblings—in that order. Dying without a will can certainly cause family drama, and the probate process is public, time-consuming, and can get expensive for your surviving family members.
3. What is probate? Probate is simply the judicial process that validates a deceased person’s will, accepts it as a legitimate legal document, ensures that any taxes or debts are settled, and distributes property to the people named in the will.
4. My neighbor told me I need a trust. Is that true? To say that you “need” a trust is a bit of an overstatement. Many people do benefit from establishing a trust: those who like to keep their affairs private; those who own multiple real estate assets; and those who want their assets to be distributed to beneficiaries in a very specific way, for example, at a certain age, or after certain milestones have been met. Assets that are in a trust when you die will not have to go through probate, which can be a huge sigh of relief for family members and loved ones.
5. What is the difference between a will and a trust? A will simply outlines how your assets should be distributed after you die. A trust actually holds assets—the trust becomes the “owner” of its assets, so to speak—so they can be distributed in a very specific way, without probate, after your passing.
6. How can I keep my estate out of probate? Transferring your property into a revocable trust is one way to avoid probate. Beneficiary designations, jointly titling your assets, and establishing payable-on-death designations for bank accounts are a few other strategies that can help you avoid probate.
7. How can I make settling my estate easier for my loved ones? The best way to ensure your affairs are in order for your loved ones is to work with a qualified estate planning attorney, and regularly review and update your estate plan.
On April 15, 2021, at 4pm PT, estate planning attorney Tammi M. Caress will be hosting a free virtual workshop to discuss these truths (and untruths) and more. Register now to secure your spot and learn the basics of estate planning from one of the most trusted estate planning attorneys in Portland, OR.