By Myka Landry
There are many times when a will is more than appropriate to distribute your assets upon death.
In this third part of my series on wills and trusts, I am going a little bit more in-depth to explain how wills work. I am hoping this series of articles will educate you so that you can make an informed decision. It will also be helpful for you to read the previous parts of this series, which explain wills and trusts in general terms, and trusts in more detail.
Unlike a revocable trust, which I discussed in part 2 of this series, a will does not hold assets during your life. You continue to hold onto your assets during your life the same way you do now. Upon your death, the assets become a part of your probate estate and are distributed according to the terms of your will.
Many believe that probate is a long and expensive process. In some states it may be, but Colorado has a simplified probate process. If your affairs are in good order, it is not much more difficult or expensive than trust administration.
In Colorado, probate begins with filing the original will in the court. After that, the appropriate paperwork is filed, which will allow the court to appoint the executor – or personal representative – who was chosen in the will.
While this sounds like it might be a big deal, it usually is just a formality. If your paperwork is in order and there is no contesting of the will, a court appearance is generally not required at any time during the probate process.
Once the personal representative is appointed, he or she must gather all of the estate’s assets, identify and notify known creditors, publish a notice to creditors who may be unknown, decide which creditor claims need to be paid, pay the creditors, make sure all tax returns are filed, and distribute the assets.
If the estate is taxable, there is much more to do, but this is a short version of what occurs during the process.
Once all of these tasks are completed, another document is filed for the estate to be closed. With the exception of actually filing the forms, the process is largely the same for a trust.
As I said, with Colorado’s simplified probate process, a will works well for many people. That said, there are times when a trust might be better, such as if you have real property in another state, a large amount of assets or a contentious family situation.
You should keep in mind, however, that a will, by itself, cannot provide for some provisions that many people want, such as incapacity planning. But these issues can usually be handled through other documents, such as powers of attorney and a living will.
A will can also include tax-planning provisions to limit your heirs’ tax liability, but it cannot protect your assets while you are alive.
When debating whether to do a will or a trust, it is wise to seek assistance from a qualified estate attorney. My three-part series only talks about these issues in general terms and is not intended to constitute legal advice.