Friday, August 26, 2016

Planning for the inevitable

"See...we plan ahead, that way we don't do anything right now. Earl explained it to me..."

-Kevin Bacon, Tremors

Nothing is ever lost; nothing is ever created. Rather, everything is transformed. The “magic” law of conservation of mass was first expressed by the French scientist Antoine Laurent de Lavoisier. This father of modern chemistry extracted hydrogen from water, and by reversing the process, made water by combining hydrogen and oxygen. Many considered this magic at the time, but the conclusion was that the mass of the final products of a chemical reaction is the same as that of its individual elements collectively. The conservation law doesn’t apply only to chemistry, however and it may explain all sorts of moves elsewhere.

Speaking of transformation, estate planning is an important aspect of a big transitional event for your family. Many people don't think about estate planning because they figure that when they die their affairs are no longer a problem. They assume their assets automatically go to their family. Others simply hold resentment or insecurities from their own past that prevent them creating an estate plan. They figure that since no one conducted estate planning for them then they shouldn't for their own family. This is all nonsense.

Without planning, when you die, the assets and debts you leave behind will go to probate court.
The cons of probate are what drive people to try to avoid it. The main problem with probate is that it is time consuming and expensive. It is also something you simply cannot ignore. Many states require 30 to 90 day waiting periods as part of probate. If a relative or potential heir decides to contest the will or the court's asset distribution, the process can take even longer. In addition, the court, attorneys, assessors, and other professionals involved all charge fees for processing an estate. These fees typically come out of the estate itself.

Without estate planning, when you die not only will your family be full of grief, they will have to go through a long and expensive court process in order to divide up your assets. Gee thanks. What a way to go! 

This can all be avoided and the money you saved throughout your life can go to the exact people you want it to. All you have to do is create a few documents. The most popular being a revocable trust. The other is a will.

A trust agreement is a document that spells out the rules that you want followed for property held in trust for your beneficiaries. Common objectives for trusts are to reduce liability, to protect property in your estate, and to avoid probate. A revocable trust essentially is a bucket to hold assets while you are alive. You can move assets in and out of the trust as you please, and when you die, the assets will be distributed to whom you wish as the trust specifies.

The other document you will want to have is a will. 
will is a legal document by which a person, the testator, expresses their wishes as to how the property will be distributed at death, and names one or more persons, the executor, to manage the estate until its final distribution.

Although the revocable trust supersedes the will, the revocable trust only controls assets that have been placed into the trust.  You need a will because it helps with the distribution of assets that are not under a trust.

Trusts and wills can be a big help to families after their loved ones die. Take into account the recent death of the famous musician Prince. He did not have a will or trust. Now his estate is in probate and the family members are arguing and appealing on how the assets are to be distributed. The only winner in these cases are the lawyers.

Setting up a trust and a will is not hard to do. Visit or contact a local attorney who can help you create these documents. The cost to create these documents are not prohibitive.

As Alan Lakein Said, "Planning is bringing the future into the present so that you can do something about it now."

Over and Out,

T. Norman