Do I Need a Will or Trust?

If you own property and you care how it is handled after your death, then you will have to have a Will or Trust. If you have minor children and you want to control who will care for them after your death then you need a Will. Without a Will, state laws will determine what happens to your property and, unless someone intervenes, the public administrator or your creditors will be appointed to settle your estate. In short, most people need a Last Will and Testament.

There are generally three ways that your property gets from you to your beneficiaries: transfer by will, transfer by trust, and tranfer by operation of law:

Transfer by Will ordinarily means that an Executor is appointed to gather your property, read your Will and distribute your property.

A "Living Trust" is a trust created while you are alive. You name and appoint the Trustee or successor tustee while you are alive. After your death, transfer by Trust means that your Trustee will distribute to your beneficiaries the property you put in the Trust while you were alive and any property that comes to the Trust by pour-over Will. The usual problem with Trusts is that people forget to fund them, that is, to transfer their assets to the Trust while they are alive.

Transfer by operation of law can mean several things. One common transfer results from the terms of legal title to property -- joint ownership with survivorship rights. If property is owned jointly /wros it becomes the property of the survivor upon the death of an owner. Another operation of law transfer occurs by contract. Two examples are a "Pay on Death" clause on a bank account and a life insurance policy.

The interplay of these three transfer types is an important part of estate planning and misapplying these tools is a very common estate planning mistake. It is not out of nosiness that your attorney asks to know all your assets and to see copies of investment account or bank account statements, deeds and other financial records. Sometimes we forget exactly how we set up an account five years ago.

Can My Attorney be Executor or Trustee?

Anyone you choose can be your Trustee. Likewise, almost anyone can be Executor in your Will. Both the positions are considered fiduciary roles and come with fiduciary obligations. Certain standards apply to the conduct of a fiduciary. Generally they must conduct the affairs of the estate or trust as a prudent businesman would do. Both positions require a certain professionalism but an executor needs only a only a minimum of financial expertise, a trustee, on the other hand, may need a bit of knowledge of investing, as the position can exist longer and with less statutory guidance. In short, it is often more efficient that an attorney handle such matters, but it is not required.

How Can I Minimize or Avoid Disputes in My Estate?

The most important thing you can do is have a well drafted Will or Trust. In the law of estates and trusts there are many words that have specialized meaning. Even some attorneys misunderstand some of the terms and procedures. Kentucky law does not generally certify specialties of legal practice but an attorney who spends his career handling personal injury cases might not be the best person to write your Will. You don't want your estate in a wreck, now do you? As for writing your Will yourself, it is possible to do that under the law of Kentucky. If you fix your own TV set and your own plumbing and deliver your own children on the side then you may be able to write your own Will without any major mistakes. On the other hand, the many hours you will spend at the law library learning estate, tax and probate law might be more valuable than the few hundred dollars you'll spend on even the most complex Will. Drive slower. you'll save a lot more money without more risk.

There are a number of things you can do in a Will or Trust to reduce costs and prevent problems and disputes. If the family beneficiaries are prone to argument, fights, manipulation or overreaching, then perhaps it would better to choose an Executor or Trustee outside the family. When deviating from the normal plan, document carefully, even if you do not disclose, you intentions, reasons and competence. Also, there are "no contest" clauses that can be included. Nothing can guarantee that there won't be a fight, but with a little care, your plan can be pretty hard to break.