A question I often get is, “What is estate planning?” Well turn the question right around, simply it’s planning your estate, but what is your estate? Your estate is all the property you have when you die that’s in your name alone. If you had a bank account with your wife or husband, that wouldn’t be in your estate because it’s not in your name alone. For estate property we are only concerned with property that only has one owner and that owner is you and the account has no beneficiaries. This can include shirts, pants, tables, couches, houses, boats, cars, investment accounts, checking accounts, savings accounts, it can include a lot. Bottom line, any property that’s in your name alone.
Another issue that comes up with estate planning, and it isn’t in your estate per se, but it’s related to it, is if you have kids and you’re a single parent, or you have kids and both parents pass away at the same time. While creating your estate plan, you should have guardians named for the kids that the parents have chosen.
Now what happens with all this stuff, we have all this stuff in the estate? Well, once you have all this stuff in the estate, you need to go to probate court because there’s property in this person’s name alone, so you have to go to probate court and probate court will look at any documents you have for an estate plan, or will just look at state law and decide how to distribute the assets. Probate is a process of gathering assets, identifying and gathering debts, paying the debts and distributing your remaining assets.
First, we’ll see what happens when there’s no estate plan in place. When the person that died did not create an estate plan, they die intestate. That basically means they died without a will. Now, if they died without a will, there’s good news and there’s bad news. The good news is, they do have an estate plan, everybody has an estate plan. The bad news is, it’s not their estate plan, it’s the estate plan of the Vermont Statutes. The probate court looks at the laws and decides how to distribute the assets according to them.
So if this person had passed away and they had a special heirloom gun, or a heirloom piece of jewelry that they wanted to give to a specific family member, that’s not going to happen now. The court will identify an administrator of the estate, which is someone the person didn’t choose, the court’s choosing them. That administrator would gather all the assets, identify all the liabilities, pay all the liabilities and then distribute all the remaining assets according to state law.
If there are children involved and there was a single parent, or two parents had perished at the same time, the court will now be naming the guardian of the kids, not the parents. The court takes into account family, relationships and similar things so it’s not like your child has a good chance of being sent to Joe Smith on the other side of the state who he or she doesn’t know. That is an extremely low probability of ever happening but he could go to a family member that wouldn’t be your first choice as a guardian.
Now, what happens if there’s an estate plan? An estate plan in this case, the basic foundational document is the will. The will is what tells the court, “This was the deceased person’s last wishes and this is what they want. They want their property to go to this person and if that person’s not around, to this person or persons. They want this person to be the executor of their estate and to administer their assets and if they have kids, and there’s no other parent surviving, they name this person as guardian of their child or children.” That is the basic foundation of any estate plan, it’s the will.
You can go more complicated, there’s a lot more complications you can add such as trusts and other instruments, but the bottom line is you’re making the decisions, you’re making the choices, which is the way it should be. An estate plan that isn’t your wishes is not an estate plan that you should have.
Now, a basic will is not complicated and does not take a long time to complete. That’s something that for example, I can do relatively quickly. If it becomes a more complicated estate plan, if you’re using trusts and you’re using life estates, you’re doing more complicated things and it takes more time. But the will is the foundational document and if you don’t have a will, you need to get a will, it’s extremely important. I know people might think, “Well I don’t have a lot of money.” It doesn’t matter if you have a lot of money or not, YOU want to make the choices on your estate. Don’t leave it to the probate court and the state to make those choices for you.
The best time to do this is now. You can tell everybody your wishes, you can tell Joe that’s he’s going to get your gun. You can tell Sally she’s going to get the engagement ring you’ve got when her father asked you to marry him, but all of that doesn’t matter. What matters is what’s written down. If it’s not written down in a will, it’s not going to happen. The best time to make it is now, don’t procrastinate longer. Think about it and decide what you want to do with your property when you pass away and make a will.
Now, I’m sure you know people that need to make wills and people that talk about this all the time. If you know someone that needs to make a will because they just do not have an estate plan in place, or they’ve been talking about changing their will for years, have them give me a call. Share this with them and help them understand that they need to do it now rather than later.
If you have any questions or think that you might be ready to make a will, the basic foundation of your estate plan, or make a more complex estate plan, feel free to reach out to me.
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