As we all know, estate planning can get complicated. This is because a full estate plan covers multiple scenarios, and includes both end-of-life and post-life solutions. This brings many to wonder whether simply having a will is enough. In most cases, it is not.
Wills, generally
Essentially, a will is a legal document that outlines how one’s estate will be handled after death. This document should include all of the estate’s assets that are not included in trusts or assets that will not pass outside the will, like life insurance and transfer on death accounts. However, just like passing without an estate plan, wills still must be filed with the probate court. This means that there may be some need for an attorney and their associated costs, depending on whether probate litigation is needed.
Ways to avoid probate
There are multiple financial instruments that can be transferred outside of probate and the will. One example is life insurance. At death, life insurance pays out to the beneficiary, regardless of what the will states. This can be used for end-of-life expenses, but does not have to be used for such a purpose. Another way to avoid probate is transfer on death instructions or beneficiary designation. These are designations that are allowed on most Illinois brokerage and bank accounts. At death, these accounts transfer to the beneficiary outside of probate.
Trusts
For some Godfrey residents, a trust may be appropriate. A trust is a separate legal entity that only exists to administer one’s assets after death. There are a plethora of trust types and reasons for using trusts. Some trusts are used to help qualify for Medicaid to get long-term care. Others are used to avoid taxes and probate, and some are designed for life insurance policies.
Trusts empower drafters
Trusts empower the drafters to make bequests contingent on whatever the drafter wants. For example, if one is worried about their kids burning through their funds too quickly, they can make the payouts occur over time. Trusts can also be set up to make payouts for specific uses. This is especially helpful if there is drug or alcohol dependency. The takeaway for our Godfrey, Illinois, readers is that there is a lot to consider when estate planning outside of a will.
