As Mount Clemens living trust attorneys, we often speak with clients that harbor misconceptions about trusts. They are not extraordinarily wealthy, and they do not have any particularly complicated legacy goals, so they assume that a last will would be the right choice. This may seem logical on the surface, but when you understand all the facts, you can see why you may want to go in a different direction.
If you create a last will, in a legal sense, you are referred to as the testator. In the document, you would name a personal representative or executor to take care of the hands-on estate administration tasks after you pass away. This administrator cannot follow the instructions in the will after you are gone and distribute assets to the inheritors independently without notifying the state. The personal representative would be required to admit the will to probate, and the court would provide supervision throughout the process.
In truth, probate serves a very logical purpose. It would not be fair for the assets in the estate to be distributed among the heirs if the deceased had outstanding debts. During the probate process, the executor is required to notify the creditors about the passing of the person in question. They are given a certain amount of time to come forward seeking satisfaction. An executor is required to start an estate bank account, and if the debts are valid, he or she would pay them using estate funds.
Another reason why probate exists is to allow for the possibility of estate challenges. To explain by way of example, let’s say that your father gets remarried to a 35-year-old woman when he is 87 years old. You and your siblings have been told that you are all equal beneficiaries, and you are named in the last will that he has had for a couple of decades. Over recent years, it has become apparent that he may not be capable of making sound decisions due to some degree of mental incapacity.
He passes away six months after his wedding, and this new wife presents a fresh last will that was constructed shortly after they were married. The will disinherits you and your siblings completely, and everything is left to this surviving spouse. Under these circumstances, you would be able to challenge the validity of the will during the probate process. A will is not valid if the testator was incapacitated or coerced in any way, so your family could win this challenge.
Pitfalls of Probate
Probate may provide certain protections, but for the vast majority of rightful inheritors, it is really not a good thing at all. There are many different tasks that must be completed during the probate process. As we have stated, creditors are given a window of opportunity to seek payment, and this takes time.
Plus, assets that comprise the estate have to be identified, gathered, and inventoried by the executor. Once again, depending on the size and scope of the estate, this can be a time-consuming assignment. There is also the matter of liquidation. Property that must be liquidated so that its value can be distributed among multiple different heirs may not sell overnight.
The inheritors do not receive their bequests while the estate is being probated, so this time lag is definitely a negative.
Another drawback is the fact that probate is not free. There are court costs, the executor must be paid, and in many cases, the executor will bring in a probate lawyer to assist. Appraisals and liquidation costs can enter the picture as well, and there are incidental expenses. All of this red ink will reduce the amount of the inheritances that will eventually be received by the heirs that are named in the last will.
Thirdly, when you use a last will, you would be providing direct, lump sum inheritances. There would be no way to mete out distributions over time to protect loved ones from squandering their bequests too quickly.
Living trust attorneys can provide an alternative that will allow things to go much more smoothly. If you were to use a living trust instead of a last will, the trustee that you name in the document would be able to distribute the assets outside of probate. As a result, these drawbacks would be avoided. Plus, with a living trust, you could instruct the trustee to provide limited distributions over an extended period of time.
Attend a Free Seminar!
If you would like to learn more, attend one of the free seminars that our living trust attorneys are holding over the coming weeks. You can check out the schedule and obtain registration information if you click this link.