If a family member dies, it is important to have a will in place to determine the disposition of the person’s assets and their final wishes. Most wills must go through the probate process, before any assets are sold and any disbursements are made. Probate is the official proving of a will in court. Most importantly, any balance owed to health care providers or Medicaid will need to be reconciled before the estate can be settled. The probate process can take more than a year to settle and can drain funds by a significant amount. So, it is important to consider these factors, and plan accordingly, to ensure that your family and your assets will be handled in the most effective manner possible. Here are some things to consider and a few reasons why a will may not preserve family assets and avoid probate.
The Difference Between Wills and Trusts
A will is a legal document that is used to name beneficiaries to virtually all of one’s assets, except those held in joint tenancy. Wills only go into effect once the testator passes away. A trust is a similar legal tool used to pass down property, but only the property that the trust is funded with goes to beneficiaries. A trust may can be used to avoid probate, excessive estate taxes, or to care for a family member with special needs and allow them to continue to receive government benefits. An experienced attorney can help you determine the best approach for your unique situation, but this planning must be done well before any death occurs. Special consideration will be given to preserving family assets and avoiding going through probate.
Communication is Key
$30 trillion will be inherited over the next three decades, according to Forbes, resulting in a larger number of heirs arguing over who gets what. Not only that, but many Millennials and Generation Xers are counting on inheritance as part of their own retirement planning due to stagnant wages, student debt, and the rising cost of housing. In fact one third of people believe they are getting a large inheritance, according to the New York Post. Sadly, the numbers just do not work out for this to be reasonable, as the average American actually dies with a large amount of debt, according to MSN. As such, communicating with your parents or grandparents, or communicating with your children and grandchildren, is key to avoiding problems.
Why Families Should Pre-Plan
Many families, young and old, do well to consider establishing a trust as a way to avoid the probate process. Moreover, discussing these matters with your children if you are the testator, or your parents if you are a beneficiary, is key to creating an ideal estate plan that takes everyone’s best interests into account. Pre-planning helps many families avoid the following unfortunate scenarios:
- Beneficiaries assume their inheritance is held in a trust, then are taken by surprise when no trust exists and they must go through the probate process;
- A trust is created but not funded, making it essentially useless in fulfilling its job;
- Because probate ends up taking much longer than property distribution, family members who were counting on their inheritance for paying off a loan, sending their child to college, or staving off bankruptcy are out of luck for a quick transfer of funds;
- Heirs argue about the testator’s decisions in probate, dragging out the process and harming the family relationship, all of which could have been avoided;
- An heir believed that they were being included in the inheritance, only to find out that they were not included;
- An heir was counting on inheritance as part of their own retirement fund, only to find out that their parents had much less than they assumed;
- A trust has certain stipulations for using the funds that are not ideal for the beneficiaries; and
- Significant money is lost during the probate process that could have been avoided had a trust been created.
Reach Out to an Experienced Maryland Probate or Estate Planning Attorney Today
Here at Frame & Frame, our Maryland estate planning attorneys can help you and your family structure a will or trust to maximize inheritance and meet the needs of all of your loved ones, while preserving family assets from probate. Contact us to set up a consultation today. Download our free guide to Wills, Trusts & Probate to learn more!