Why is a Will alone a ticket to probate court?

If you plan with a will alone, then you are virtually guaranteeing your family and loved ones will have substantial involvement with the Probate Court. A Will alone will not avoid probate. In fact, all assets governed by a Will are assets subject to Probate Court and all the related costs that go along with that. When assets are subject to probate, the assets need to be identified, valued and listed on an inventory and appraisement. The inventory and appraisement is a matter of public record and the whole world can see what the assets are and their value. Then, the court gets a fee based on the value of probate assets. If there is real estate in other states going through probate, your family will need to go through an ancillary probate in that state. This usually involves hiring another lawyer and paying more fees.

Contrary to a common misconception, a Will does not dispose of all kinds of property. The disposition of jointly owned assets is governed by the manner they are owned jointly. The disposition of retirement plans is governed by the beneficiary designation on file with the plan administrator or custodian. The disposition of life insurance proceeds is governed by the beneficiary designation on file with the insurance company. Furthermore, a Will alone will not dispose of all real estate interests.

Often, clients think that they can simply put their child or children on a deed to real estate. Doing this can have adverse consequences namely:

     (1) loss of step up in basis at death,
     (2) exposure to claims (creditors and divorce) levied against your child (the      joint owner), and
     (3) preventing a child’s right that they may otherwise have to government      benefits

Everyone needs their own plan, to take care of their situation, their assets, and their family. One need not be a multi-millionaire to benefit from sound estate planning. Using a revocable trust agreement to convert probate assets to non-probate assets will accomplish many objectives: privacy, less cost to the Treasurer, and generally, less red-tape. Leaving assets “in trust” can protect these assets from loss in a lawsuit, avoid estate taxes, and keep your property in your family. In sum, using a revocable living trust as a will substitute and leaving assets “in trust” are two steps that will protect and preserve your property.

Contributed to Bluffton Sun by:
Mark F. Winn, J.D., Master in Estate Planning, a local tax, asset protection and estate planning attorney. Submitted for October 2, 2012 publication in Bluffton Sun and Hilton Head Island Sun