Estate Planning – Top Three Most Frequently Asked Questions

Hello, and welcome back to The Estate Planning Podcast, I’m your host, Colby Kukelski, In this week’s episode we’re going to focus on the most commonly asked estate planning questions. I asked a few of you to send in some questions that you have regarding estate planning, now that you have a general overview of what we do. I’m going to answer a couple of those today here for you.

So turning to the questions that I’ve already received, one of the most frequently asked is, can we talk about a little bit more of the differences between a Will and a Trust. I think this is a great starting point for our conversation today. If you recall from one of our previous episodes, a Will is a document you have drawn up during life. It designates where your assets go upon your passing. However, a Will must be probated, meaning a probate court must determine the validity of your Will after you’ve passed away. So even though you’ve had a document drawn up, you’ve signed it, you’ve decided where everything goes, that Will still must be validated by the court upon your passing. In order to make that determination, the court is going to ask all of the beneficiaries of your Will what they think about your Will, but also any other potential heirs or those other individuals who could have inherited had you not had a Will.

In this particular situation and the reason most clients want to avoid probate is we don’t want to ask a bunch of people what they think about our Will. When we put a Will in place, we’ve already decided where our stuff goes, that should be the way that it is. But anytime you’re using the Will, it must be probated. So even if you’ve gone through the trouble of you know, putting a document in place, deciding where your assets are going to go, that Will will still require probate at your passing. And another side to this whole probate conversation is the lack of accessibility to your assets. Let’s say something’s happened to a loved on and you need to access a bank account to pay for final expenses. Typically, a bank or a financial institution is not going to grant you access to those accounts, until you’ve gone through the probate process. So in some instances, we have loved ones coming to us saying I need to pay for final expenses, and the bank’s not giving me access to their account. That’s where we have to explain that’s because you haven’t gone through probate. Probate has to be started first before anything regarding your estate can be finalized upon your passing. So what’s different with a Trust, a Trust is very similar to Will, it’s a document you have drawn up during life. It’s a document that designates where your assets go. It’s a document that appoints someone to carry out your final wishes. But the primary difference is that if a Trust is properly funded, it will not require probate. So we won’t have to ask the court to validate it, we won’t have to ask those heirs what they think about our Trust, we won’t have to worry about financial institutions not giving our loved ones immediate access to our assets. Because we’ve done all this work ahead of time. For most families, if they’re using, you know, one of these Revocable Trusts, sometimes known as a Living Trust, it really is to make things as simple as possible on their loved ones. So the biggest differences between a Will and a Trust is the amount of work that would be involved at one’s passing. The Will is always going to require probate, whereas the Trust is going to make things much simpler, much quicker. So when thinking about the two and what would work best for your family, I really do suggest thinking, you know, what are the long term goals? How much work do we want to put on our heirs if something should happen to us?

On our next question that we’re going to discuss is from someone who asked more information about a Trust. If using a Trust and funding it, do you still have access to the assets? In our example of the Trust we’ve been discussing recently that Revocable Trust, sometimes known as a Living Trust. Any assets that you place inside of this Trust are still yours, they’re still yours to spend the income, and they’re still yours to spend the principal. In terms of real estate. If we retitle your real estate to be owned by your Trust, you can still sell it, you can still rent it. All the things are still yours. Now, there are other types of Trusts that don’t necessarily have access to your assets. We haven’t really discussed those Trusts yet, but stick around in later episodes and we’ll talk about more about those Irrevocable Trusts and why some families may use them. But for now, yes, if you’re using a Revocable Trust or Living Trust, the assets held by that Trust are still yours just freely spend and to freely use.

Then our final question that we’re going to get to today is how often I should update my estate plan. This is a question that will apply to you whether you have a Will, whether you’re using a Trust. Anytime you have an estate plan, it is very important that you revisit that estate plan from time to time. Typically, we recommend about every three years or so. We put this estate plan in place, but we don’t want it to just sit there, we don’t want it to just get old. There are a lot of reasons you’ll want to revisit your estate plan in terms of your family situations. There may be marriages, divorces, births, deaths. We want to make sure that your plan is as up to date as it can be to address any and all of those changes. But aside from family situations, the laws change. Laws change a little bit more frequently than we’d like. But it’s very important that you revisit your estate plan from time to time. That way, if there’s a major change in the tax law, we can revisit that with you. So anytime you have an estate plan in place, it’s important that we keep this current and we revisit it from time to time. Again, usually for most people that’s about every three years or so.

If you’ve enjoyed this week’s episode regarding some frequently asked questions, I do recommend, send me your questions and we’ll address them in our later episodes. It’s hard for a lot of information into one episode without it being overwhelming. So if there is anything that you wish I would have gone into a little further or something that just piqued your interest, feel free to send that into we and we’ll get to it. Thank you for joining us for this week’s episode. Join us back here next week, and we’re going to discuss some more of the common questions and concerns you should be considering when thinking about your estate plan. Thanks, guys.

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