When most people think about estate planning, writing a will is often the first thing that comes to mind. It’s a common assumption that a will is the simplest and most effective way to ensure your assets are distributed according to your wishes after you’re gone. While wills are certainly an important estate planning tool, they might not always be the best or most efficient option available. Today, we’ll look at some common estate planning options to help you choose the best one for you. 

Creating a Will

In recent years, online services have made it easier and more affordable to create do-it-yourself (DIY) wills from standardized forms. However, while this might seem convenient, it can also be risky. Wills created without professional legal advice can contain errors or omissions that could invalidate them or lead to unintended consequences, including unnecessary delays and expenses in transferring your assets to your loved ones.

Moreover, a will might not address all aspects of your estate planning needs. For example, it might not offer the protection and efficiency you’re hoping for, particularly when it comes to the much-dreaded probate process.

The Probate Process

Another potential drawback of using a will as your main estate planning tool is the probate process. Probate is the legal procedure through which a will is validated and assets are distributed to the beneficiaries. While this might sound straightforward, probate can often be time-consuming and expensive. 

The probate process involves several steps, including proving the will’s validity, inventorying the deceased’s assets, paying off debts and taxes, and finally distributing the remaining assets to the beneficiaries. Depending on the complexity of the estate, whether it owes any debts, and whether any disputes arise, this process can take months or even years to complete. During this time, your loved ones might be left waiting with limited or no access to the assets you intended for them.

Moreover, probate can be costly. Legal fees, court costs, and other related expenses can add up, potentially reducing the estate's overall value. In some cases, the costs associated with probate can be significant, leaving your beneficiaries with much less than you intended.

Why a Trust Might Be a Better Option

For many people, especially those with small to moderate-sized estates, a trust might be a more effective primary estate planning tool than a will. A trust is a legal arrangement where one party, known as the trustee, holds and manages assets on behalf of another party, the beneficiaries. 

One of the most significant advantages of a trust is that it allows for the transfer of assets without the need for probate. By avoiding probate, your heirs can receive their inheritance much more quickly and without the associated delays and costs. 

Additionally, because a trust is a private arrangement, the details of your estate and the identity of your beneficiaries can remain confidential, unlike the public process of probate. And trusts offer the beneficiaries greater protection against the claims of divorcing spouses and creditors.

Trusts also offer greater control and flexibility over how and when your assets are distributed. For example, you can set specific terms and conditions for distributions, such as staggered payments over time, to ensure your beneficiaries are provided for according to your wishes.

Although a trust might be the best primary estate planning tool for you, it is often advisable to have a will—possibly a pourover will—to transfer assets that are intentionally or unintentionally omitted from the trust. 

Transfer on Death Deeds and Payable on Death Accounts

Depending on the situation, a Transfer on Death Deed (TODD)—also known as a TOD deed—or a Payable on Death (POD) account may offer better options for certain types of assets. These tools can help bypass the probate process—the court-supervised procedure for distributing a person’s estate—making the transfer of assets simpler, faster, and often less expensive.

A TOD deed allows real estate to be transferred directly to a beneficiary upon the owner's death, without going through probate. This is particularly advantageous if the primary asset you wish to leave behind is your home or other real property. 

Because the transfer is immediate upon death, the beneficiary gains ownership more quickly and avoids the potential costs and delays of probate. In contrast, a will must be validated in probate court, which can take months or even years to complete. For those looking to streamline the transfer of real estate and keep it out of the probate process, a TOD deed is often a better option.

Similarly, Payable on Death (POD) accounts allow bank accounts, retirement accounts, or investment funds to pass directly to a named beneficiary upon the account holder's death. The main advantage here is that, like a TOD deed, POD accounts also bypass probate. The named beneficiary simply needs to present proof of death to the financial institution to access the funds, making the process quick and efficient. 

Wills, on the other hand, require a court process, and any assets covered by a will remain unavailable until probate is completed. For individuals who want to ensure their heirs have immediate access to liquid assets, POD accounts can be a better option.

Some states also allow transfer-on-death (TOD) beneficiary designations for motor vehicles. 

The Importance of Legal Guidance

Given the complexity of estate planning law, seeking professional legal guidance is essential to ensure your plan is comprehensive and tailored to your specific needs. An attorney can help you understand your options, including the benefits of trusts and other estate planning tools, and guide you in creating a plan that provides for your loved ones and protects your legacy.

Whether you choose to use a will, a trust, or a combination of tools, having an estate plan in place can provide peace of mind and help ensure that your wishes are carried out as intended.

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