What happens when you die without a Will?

When I pose this question to my clients, the most common answer is “the State gets everything”. Nothing could be further from the truth. In reality, when you die without a Will (intestate) and owning property, your State’s laws of intestate succession determine how your property is distributed. In many instances, this plan of distribution works exactly as you would desire. In most States, the distribution would be to your spouse and children, or if there are none, then to other family members, like siblings and cousins. The laws are intended to predict what the “average person” would do in similar circumstances. Most people leave their property to their children equally. However, what if you desire to disinherit one of your children, or perhaps you desire to leave a portion of your property to your favorite charity? In that circumstance you must have a validly executed Last Will and Testament.

What is a “Revocable Living Trust”?

A revocable living trust is simply a trust created during your lifetime to help you manage your property and later, after your death, handle the distribution of your property to your children and other beneficiaries without the need for probate. During your lifetime the trust is completely revocable and you can amend its terms at any time. Also, during your lifetime, you occupy the roles of Trustor, or the creator of the trust, Trustee, or the person designated to carry out the terms of the trust, and Beneficiary, because during your lifetime the trust is administered for your benefit. After your death, you are still the Trustor as the creator of the Trust. However, the roles of Trustee and Beneficiary pass to other people that you designate in your trust. The Trust owns the property that you transfer to it during your lifetime. In most cases this will be all of your property. After your death, the Trust contains instructions for your Trustee regarding how you desire your property to be distributed. Because the Trust is the owner of your property when you die, rather than yourself, probate is not necessary to distribute your property.

What is Probate?

Probate is the legal process of establishing the validity of a Will if there is one, or, if there is no Will, substituting State Law in place of a Will to determine distribution of your estate. Probate is not the nightmare it is frequently made out to be. Probate exists for the protection of the surviving family and creditors of the deceased person by ensuring that only those persons who are validly owed money by the deceased get paid and only those persons who are validly entitled to the property of the deceased receive it. Nevertheless, Probate is time consuming and can be expensive. So, if it is possible to avoid probate through the use of a properly drafted revocable living trust, it is a good idea to do so.

If I have a Revocable Living Trust, do I still need a Will?

Yes, even though a primary reason for creating a revocable living trust is probate avoidance, you still need a Will in the event that you own property outside of your trust at the time of your death. This can occur for many reasons, but the biggest reason is that most people live many years after the creation and funding of their revocable living trust. During these years, the property they own changes for many reasons, including acquiring more property, replacing assets with other assets, receiving inheritances, selling property, and giving some of their property away. If they have not been mindful to keep their trust updated along the way, there is a chance they will die with some of their property outside of the trust. For this reason, estate planning attorneys use a special form of will, called a “Pour-Over Will”, to capture this property and return it to the trust.

How often should I have my Living Trust reviewed?

Initially, I advise my clients to have their estate plan reviewed approximately every five years. However, you should have your estate plan reviewed more frequently if your circumstances change, like for example, if you move to another state, or if you come into significantly more wealth than you originally planned for. Another reason to have your estate plan reviewed is if one or more of your intended beneficiaries dies before you do or if the person you designated as your successor trustee is no longer available. As you get older, it might be wise to have your estate plan reviewed on a bi-annual basis to make sure you are getting all of the benefit you bargained for in creating your estate plan.