What happens if you don’t have a will when you pass?
What happens to your estate if you don’t have a valid Will or Trust when you pass?
The answer to that question will partially depend on what state you resided in. If you die without having a valid will or a trust, your assets will pass by State laws of intestate succession and likely undergo the probate process.
Probate is a state court administered process that transfers the estate of a deceased individual to named or remaining heirs. An estate is made up of the decedent’s real estate, personal property, life insurance, bank accounts, investments and personal belongings. In probate court, an administrator is appointed by the court as a representative to collect the assets, settle any outstanding debts and then distribute any of the decedents (the person who passed) remaining assets to the beneficiaries. All matters of probate are reviewed by the state court. Each state has their own probate laws that dictate how the affairs of an estate are to be handled. Depending on the state (where the decedent resided), area and the complexity of the estate; probate can take anywhere for seven months to multiple years to complete. Probate proceedings are a public record. Anyone can access information about your estate and beneficiaries once it enters probate. The process can take from six months to several years to complete and your beneficiaries may not receive their inheritance until the probate is completed.
For this reason, it is highly advised that you create either a will or a revocable living trust if you do not currently have one. A will is a legal document that provides instructions for what should happen to a person’s assets after his or her death. This term “last will and testament” is commonly used to mean the same thing as a “will”, but to be exact, a last will and testament refers to the most recent version of a will. A will is commonly used to distribute a personal property, real estate, investments or business interests. It may also be used to appoint legal guardians. If a person dies without a will, they are said to be intestate, and state intestacy laws govern the distribution of the property of the person who passed. A trust is an arrangement whereby property is legally owned and managed by an individual or fiduciary as trustee for the benefit of another who is referred to as a beneficiary, who is the owner of the property.
What is a Revocable Living Trust? Click play on the video above to learn more about revocable living trusts and how they can assist you with your estate planning needs. A living trust can be an incredibly valuable and powerful tool when it comes to estate planning. A revocable living trust is a legal arrangement, used by estate planners that allows assets to be held and managed by a third party. This third party in a trust is known as a Trustee. The Trustee is the person or group of people responsible for ensuring that an estate is handled in the manner specified in the trust documents.
A revocable living trust lets you decide how your assets are managed and distributed. A living trust holds (owns) the property you put into the trust. Unless specifically stated in the language of the living trust, you are permitted to control the trust assets as the trustee while you are living. Upon your death, the living trust becomes irrevocable and the assets in your trust will be distributed to the beneficiaries that you have designated.
The person who creates the living trust, is usually referred to as a settlor or grantor. The successor trustee is the person or institution who takes over the management of a living trust when the original trustee (typically you) has passed or become incapacitated. The beneficiaries of the trust are the people named in the living trust who will receive the assets held by the trust once you have passed.
Language defining the rules of the trust, such as the name of a successor trustee and information on how the assets of the trust are to be distributed upon your passing are all recorded in the trust documents. The living trust is funded by transferring your personal assets to it. Once the assets are transferred, the trust owns the assets. While the trust is revocable and you are designated as the trustee, you may place assets into the trust or remove assets from it. Most types of assets can be placed into a living trust. Common examples of irrevocable trust assets include real estate, land, automobiles, business interests, stocks, bonds and bank accounts.