In this time of social distancing, essential workers face unique challenges. And some of the most important frontline workers are our teachers and educational professionals.
Unfortunately, teachers face such a murky outlook in this current crisis that the matter of estate planning is weighing heavily on many teachers’ minds; some have even taken to writing wills. While we can fervently hope that all of our teachers survive this year and remain in the classroom for many years to come, those writing wills are correct on one point: it is always a good idea to have your estate plan in order.
This is true even in the best of times. In the uncertainty of a global pandemic, it is doubly true.
If you have been procrastinating on writing a will or trust, now is the time to do so. If you have one which has grown stale or outdated, then now is the time to update it. Life is unpredictable these days, but with an estate plan, you can add a bit of predictability to questions regarding your estate.
If You Don’t Plan Your Estate
Generally, if you don’t make an estate plan, your assets will be distributed to the courts.
They will go your family members, starting with the closest – your spouse and your children. If you have no immediate family, then they will be distributed to more distant relatives. This process is known as intestate succession.
Most likely (although certainly not always) you intend to leave your assets to your immediate family members anyways. So what is the problem?
The problem is probate, which is the legal process by which the courts divide up your property. There is a lot to know about the probate process, but the main takeaway is that it’s something best avoided.
There are a few major reasons for this:
- Probate is a long and extremely stressful process for everyone involved. It usually takes around two years, sometimes a little less, sometimes a little more. Your family members will go through a lot of legal difficulty at a time when they ought to be left alone in their grief.
- The probate court proceedings are a matter of public record. After you die, the details of your estate will be made public for the whole world to see.
- Probate is very expensive. There are a number of costs involved, ranging from court filing fees to attorney’s fees.
In short, you cannot rely on intestate succession to solve your estate planning problems. It is meant to be a stopgap, a last line of defense when there is no better option. It may be accurate in broad strokes, but as with all legal matters, the devil is in the details.
How a Will Can Help You
The best way to get out of this trap is through estate planning, and the most straightforward means of estate planning is to write a will.
You probably already have some familiarity with wills. Properly speaking, a will is a document which gives directions on how your money and other property will be distributed to your beneficiaries after your death. This process is overseen by an executor, who is responsible for carrying out your wishes. The executor has a very important role and you should not make your selection lightly.
If you write a will, then your property will still go through probate. However, the process will typically be much smoother, and you will have much more say over what happens to your assets, than if you left no will at all.
Writing a basic will is easy, and there are even forms you can find in books and on the internet that can help you draft a basic one on your own. (One man wrote a will by carving it into his tractor while he was trapped beneath it, and this was actually accepted as valid by the courts in Canada.)
Obviously, you’ll want a stronger will than this. A cheap and hastily done will is often little better than no will at all. The best thing to do is to hire an estate planning attorney to write your will for you; with the professional legal knowledge at their disposal, an attorney can craft you a rock-solid legal document.
Hiring an attorney to write your will for you can cost around $3,500. This can be a daunting figure, particularly in this time of economic uncertainty, but you should consider it in context. If you don’t have a will, then the costs to you and your loved ones will likely be much higher down the road.
You should see this as an investment – perhaps even a marshmallow test of sorts. By making a down payment on your estate plan now, you can save yourself and your heirs a lot of stress later.
Another Option: Setting up a Trust
Wills are not the only kind of estate plan you can create. Another commonly used option is the trust.
Trusts have a structure that is somewhat similar to wills, although there are some key differences. When you set up a trust, you must actively place your assets into it, which you do not have to do for a will.
Once your assets are placed in the trust, they will fall under the authority of a trustee. During your lifetime, you will be the trustee, and so you will have effectively the same control over your assets that you would have otherwise – nothing major will change.
After you die, however, a successor trustee will take control of your assets within the trust and distribute them to your beneficiaries, much as the executor of a will would do.
Writing a trust is a more involved process than writing a will… but it has a couple of major benefits, which is why many people use trusts instead of wills to build their estate plans today.
The most important of these benefits is that trusts avoid probate entirely. Any property you place in a trust will not have to go through the probate process. This, of course, allows for much greater privacy, efficiency, and ease.
Trusts also allow you to plan for the possibility of your incapacitation. With a will, the executor cannot step in until after you are dead, but that is not necessarily the case with a trust: you can easily amend your trust to allow the successor trustee to begin making decisions on your behalf in the event of your potential future incapacitation.
People can become incapacitated in all sorts of ways, and yes, it has happened with COVID. Although it is fortunately not very common, some patients who develop serious complications from the virus have ended up in comas. There is a lot that is uncertain in these times, so it is a good idea to cover all your bases, and a trust can help you do that.
Trusts, however, have one major disadvantage over wills: they cannot be used to select a guardian for your minor children. If you have children, then you will need to designate their guardianship in a will. This doesn’t stop you from using a trust, but it does mean that you may have to set up a simple will along with your trust.
Trusts are generally more complex than wills, and this means that they are generally more expensive to set up. However, the return on your investment is also greater. By getting out of probate completely, you will save yourself and your heirs a great deal of time and money.
Everyone’s situation is different. If you want to learn more about the differences between trusts and wills, check out our trust and wills guide that breaks this down nicely.
Powers of Attorney
Another way to plan for your possible incapacitation is to set up a power of attorney.
A power of attorney is a document that allows you to designate an agent who will make personal and financial decisions on your behalf if you become incapacitated. If you are particularly concerned about preparing for this eventuality, but would rather write a will than a trust, then a power of attorney can help you do this.
Putting It All Together
Many people procrastinate on estate planning, but the current crisis has brought it into much sharper focus for many.
That is why there is no better time than right now to set up your estate plan. If it is something you have been putting off for years, then this is your opportunity to tackle it.
Hopefully, you and your loved ones will be fine during this crisis. But you can take some comfort in knowing that even if things do go badly, you will have prepared for it.
If you emerge from the other end of this crisis perfectly fine, then the time you spent planning your estate will not have been time wasted. Life is terminal, after all, and while most of us can hope to live into old age, sudden accidents and illnesses can strike at any time.
We have always lived in an unpredictable world, and current events have just made that all the clearer. That is why estate planning is so necessary.
Our firm consists of a team of skilled, passionate attorneys who are experts in the field of estate planning. If you are ready to make an estate plan, or would like to talk over your estate planning options, then give us a call today. We would be happy to hear from you.