The word “probate” sparks fear in the hearts and minds of individuals. An initial conversation with a new estate planning client might go something like this:
Me: “Thanks for coming in today, how can I consult with you? What are you goals for today?
Client: “I want to avoid a probate when I pass away.”
Me: “Ok! Why?”
Client: Blank stare…. blinks heavily, shocked that I could even ask such a question. “Probate is bad. It is expensive and it is long. I don’t want my heirs to go through that.”
Me: “Well, that is true in some states (which happen to be the states where big named financial planners who are often on TV and in magazines live). But, probate is simply the legal process by which a Court will declare a will as a final will, appoint a Personal Representative, and then the wishes of the decedent, through the will are carried out. In many states, including Washington where I practice, it is a simple and inexpensive process.”
Clients typically have the same goals across the board. They want an estate process that is as simple as possible, as fast as possible, as inexpensive as possible, and as painless as possible. No one has ever said to me, “I would like to make my heirs wait a really long time until they can get their inheritance and only after they have paid exorbitant fees to attorneys and accountants.” The truth is, if it is appropriate, there are a lot of ways to have assets pass quickly and inexpensively that do not require a will or a living trust.
While there can be advantages of living trusts, an estate plan with a living trust will always also include a will for the same individual. This is confusing, right? The whole reason this person wanted a living trust in the first place is to avoid a will. When a person passes away, a living trust can only direct the management and distribution of those assets held in that trust. Those assets not held in the name of the trust, but rather held in the individual’s name alone, are not governed by the trust and require some other legal system or court administration to administer them. It is so common in fact, to forget to transfer an asset into a trust that attorneys will often prepare a will that directs anything mistakenly forgotten to be put into the trust to be distributed under the will to the trust. This is called a Pour-Over Will. If you have a living trust, I bet you have a pour-over will too and if you don’t, you need one. Unfortunately, if you must use a pour-over will to fund the trust, you will likely find yourself in the situation of having to do the anticipated probate and the unanticipated trust administration. This is the very situation most clients are trying to avoid.
So, this brings me back to my client.
Me: “I understand you want to make sure that your family, in a time of grief, has the correct tools to make the administration of your estate as efficiently as possible. Let’s talk more about your specific goals and try to find the best possible ways for you to create your legacy.”
Client: “Yes!” The client is happy, joyful, and feels lucky they have found an attorney who is listening to their needs and creating a plan specific to his or her family and circumstances.
Okay, I just threw that last part in because it is every lawyer’s dream. If you have a living trust, you want to have a pour-over will also. If you manage your trust and assets well during your lifetime, the use of the will may not be necessary. However, if you forget to fund new assets into your trust, or an asset is later discovered having not been transferred, the Pour-Over will be used to force those assets into your trust to allow the uniform management of those assets under the directions outlined in the trust.