Back in 2007, former playboy model Anna Nicole Smith passed away tragically at age 39. As if her shocking death wasn’t enough, her family had to deal with the ownership of her estate after her death.
It can happen to you. Unfortunately, a will is not enough. Just because you leave a will behind doesn’t mean you avoid a probate or estate tax. If you die with a will your property goes to a local court decides who gets what.
The court will determine the legitimacy of your will. If it was written with undue influence, if it was the last will and who the true executor of the will is. The probate court will take inventory of your personal and real property and investigate claims made against your property.
The two main reason for having a will is to assign a custodial guardian of minor children and assign an executor. Usually the executor of your will is not the guardian of your kids.
The executor has control if there are uncontemplated issues, later on. Even a very well drafted will becomes a public document and must go to probate in each state where the decedent had property.
Aside from the custody of minor children, a will does not protect your assets. However, a Trust will. To avoid the mistake Smith made, get a consultation with a qualified estate planning attorney to create a trust. A trust is a contract. If you choose to be private about your private matter you will avoid the probate process. Anyone with $100,000 or more should have a Trust.
A revocable trust means that you have sufficient strings to revoke the contract; nullify and void it. This does not exempt you from inheritance tax, since you still owned your assets on the day of your death. An irrevocable trust is when you give up ownership claims against your assets transferred from your trust. You can settle your ownership claims with an Independent Trustee.
The Trustee cannot be you and it can not be the Beneficiary. (If you are the Grantor of such trust, your wife can be the Trustee and your son/daughter can be the Beneficiary. However, your wife can not be a Trustee and a Beneficiary in the Irrevocable trust).