While many of the people who visit our law firm understand that having a comprehensive estate plan is smart if you want to protect your future and family, we also encounter those who don’t follow through and fail to start planning. But do you know what happens if die without crucial estate planning tools?
Here is what will generally happen if you die without a will or trust, also known as interstate, and what will happen with a will, and with a revocable living trust. For this example, we assume you have two children, but no spouse:
If you die intestate, then all of the accounts and property that are in your name will have to go through probate. As a result of the probate process, information such as what you owned and who it was distributed to will be made public. Mortgage, car loan, and credit card companies will also seek payment on balances you owed at the time of your death.
If your only remaining heirs are your two children but you didn’t leave instructions, then state law will mandate divvying up proceeds equally. This means the oldest child will get their share immediately if they are an adult. If the child is a minor, then the court will appoint a guardian to manage the money until they are a legal adult. If you don’t have a valid will when you die, the court will decide which person raises your minor child, not you.
If you have a valid will when you pass away, then your accounts and property still have to go through probate. However, after your creditors have been paid, the remaining accounts and property will be distributed to people named in the will.
If you decide to leave money for your children and name a guardian for any minor children, the court will generally abide by your wishes. Courts also generally respect your wishes regarding gifting money to a charity, family member, or friend.
With a trust, you retain control of your estate plan, accounts, and property. Accounts and property owned by the trust will not be subject to the probate process when you die. One of the greatest benefits of using a trust is that it specifies the exact process for transferring accounts and property to the intended individuals. Trusts also keep this information private and out of the view of the public. When you create the trust, you name a person you trust to manage your affairs in accordance with your specific instructions.
It’s important to note that the trust needs to be properly funded if you want to avoid probate. Proper funding means that ownership of your accounts and property is in the name of your trust. You will need a pour-over will to get any accounts or property inadvertently or intentionally left out of your trust into the name of the trust. If you have minor children, then you still need to name a guardian in your will.
- Wills vs. Trusts: A Quick & Simple Reference Guide
- Funding Your Trust in Virginia: What You Need to Know
- 3 Tips for Avoiding the Expensive Cost of Probate
Legacy Law Centers is here to assist with all of your estate planning matters, no matter how complicated your situation might be. To request a complimentary review, please give us a call at (571) 200-5559. Our Loudon County estate planning attorneys are ready to help you take control of your future.