So, let’s dive in and start looking at somebody’s signs in more details starting with the estate planning. Let’s look at common estate plans that most folks tend to have. Hate to say it, but a very common plan is no plan at all. There’s plans involving wills. There’s also plans involving joint ownership of assets. Similar to that, there’s plans involving beneficiary designations.
Next, gifting is a very common estate plan that a lot of folks follow. Then, finally, the last common form of estate planning, we’re going to examine here tonight involves living trusts.
Let’s dive in and start looking at these one by one beginning with the no estate plan option. Sometimes, we refer to this as the “I love you plan”. Because, since there’s nothing in writing, all that consists of are the best intentions and good hopes that things will turn out OK.
I was reading a newspaper article earlier today, and I find this hard to believe. We all know everything on the newspapers is true. Good, you’re paying attention. I’m starting out with a joke, OK.
Honestly, I restituted 70 percent of Americans die without a will. I think that’s kind of high. Even if it’s just half, that’s an astounding number. I can tell you from having done this for 23 years, we handle a lot of probate cases where there’s no will.
A lot of people don’t do it. If you don’t, the result is going to be probate. Here’s why. When you die, if you want assets and just your name alone, and you don’t have any set of instructions to say what’s to happen with that asset, it’s going to end up going through probate. If you don’t have a will, there’s no set of instructions that tells the world what to do with your assets when you die.
As a result, probate court has to intervene to service a neutral kind of umpire, to make sure your creditors get treated fairly, and that your family gets treated fairly. And of course, those are following rules set forth by the State of Ohio.
They may not be the rules you want. But somebody has to do something because you didn’t. The result is if you don’t have any will, or you don’t have any other instructions, nothing in writing, then we have to go through probate because probate court has to deal with all of these.
Now, similar to this, is an estate plan involving just a will. Now, I want to make clear right now, I don’t want any of you to leave here tonight thinking you don’t need a will. You do.
A will is a beginning, basic store of instrument that you have to have in every estate plan because the will deals with all those assets you got in your name alone. It says what to deal with, how to deal with them.
It says, “Who’s going to get them?” Then, it says, “Who’s going to be in charge?” Now, who’s going to get them? Those are the beneficiaries. These are the people who take from you. They benefit from you.
We call them beneficiaries. The person in charge of your estate, we call that person an executor. He or she is in charge of executing upon those instructions you put in your will. Now, there’s some drawbacks to a will.
First and foremost, it guarantees your estate will go through probate, because the probate court has to validate that will. The probate court has to make sure it was properly signed, and indeed, it was your will.
You’re the person who signed it. The other drawback with probate in a will is it does not control jointly held assets or beneficiary designations.
A lot of wealth that people own is never controlled by their will. You need to understand this dynamic because it can go wrong. It can go terribly wrong.
