"If I don’t have a will, the State will get everything when I die!"

"I don’t need a will, because everything is going to my spouse!"

"If I have a will, my estate doesn’t go through probate!"

"I need a living trust, so I can avoid probate!"

The author addresses these and similar misunderstandings on a daily basis. Some are alarmist, some induce heedless complacency; all can lead to bad results.

If you don’t have a will, your assets pass to the people that the State assumes – rightly or wrongly – you would want to have them. Sometimes the assumptions are odd. Assets owned by you in your sole name are divided between your children and your spouse – and if you have no children, between your spouse and your parents.

This strange provision seems to be drafted to protect folks in unhappy marriages. Only if you have no children or surviving parents do your assets all pass to your spouse. Nothing passes to the State (except for taxes and fees) unless you have no relatives at all.

The process of probate was created by the State to ensure that your wishes are followed when you die. Everything you own when you die that does not have a beneficiary designation will pass through probate.

Probate is not necessarily a bad thing. It creates delays, and expensive ones at that, but if you own anything when you die, probate is the way your loved ones get your stuff. Sometimes probate can and should be avoided, but it is certainly not an unmitigated evil.

Your will is what tells the probate court what to do with your stuff when you die. So, if you die with assets in your own name that don’t have a beneficiary designation, a will is a very good thing to have – but it doesn’t avoid probate. It controls it.

Probate avoidance is accomplished with living trusts, among other vehicles. Living trusts avoid probate because assets transferred to the trust, controlled by you as trustee of that trust, are technically no longer owned by you. Since only what you own at the date of death is administered through the probate process, the assets in the trust are not under the jurisdiction of the probate courts.

The benefits of probate avoidance include eliminating or avoiding the costs and delays inherent in the legal system, and eliminating the publicity of the probate system. Living trusts also provide other benefits, such as improved asset management capability if you become incompetent. Powers of attorney help with asset management, but living trusts are a superior tool.

Other probate avoidance tools include life estate deeds, with and without the retained power to sell the property; paid on death (POD) and transfer on death (TOD) designations for bank and securities accounts, respectively; and joint ownership, but only in appropriate situations.

Double-check your own assumptions, and make sure your plans are founded on fact, not myth-understandings. Meet with your planner to be sure that your plan accomplishes your goals.