Like driving without a seatbelt, dying without a will or trust can have harmful and regrettable results.
And despite many highly publicized instances involving celebrities , 67% of Americans surveyed are unprepared to properly transition their assets at death, often leading to slow and costly resolutions or family discord. As of 2021, will-preparedness was highest among those age 65 or older with higher levels of education and household income.
Common reasons for not having a will are procrastination, expense, lack of assets and denial of mortality. To every reason, Michael Sears, trust officer at BOK Financial®, has a quick response: "It just needs to be done."
"By being proactive, you'll save those you love a lot of time and trouble, and then be assured that your assets and possessions will be distributed on your terms, not anyone else's," said Sears.
Do you need a 'simple will' or a trust?
If you want the quickest and least-expensive way to plan for your asset distribution—or you don't have a lot of assets—then you might just need a will. Simply put, a will is a legal document that states how you would like your assets distributed after you die and whom you would like designated as guardian of your children or other dependents.
It's more expensive and more time-intensive to add a trust to your estate plan, but doing so also has benefits, including:
- Avoiding probate. This is the court-supervised process of distributing assets. It makes all the deceased's known assets public, and they can be claimed by current creditors. This happened after the musician Prince died without a will in 2016. After an initial six-year legal battle, yet another family legal disagreement about his assets occurred in early 2024.
Even without a prolonged battle, probate can take months, if not years, and then leave little for those who felt they had a claim to the assets. Jointly titled assets, and assets with designated beneficiaries—like a bank, brokerage or retirement account—are often shielded from probate.
Keeping your plans and wishes private. Instead of being filed with the court, a trust can be administered by your designated trustee who has sole knowledge of what goes where or to whom. The trustee's duty is to share that information with the beneficiaries, but it does not become public.
Securing assets for future generations. Unlike with a will, with a trust you can stipulate the adult ages that your children would receive their assets. By doing so—instead of gifting them outright—you can reasonably protect those assets from being spent unwisely. "I've seen an uptick recently in these arrangements. Many beneficiaries are not ready for the responsibility of assets and could prematurely reduce or deplete them," said Sears.
Meanwhile, with both a will and a trust you get the benefit of having your affairs in order. This decreases the burden on your family, prevents squabbles or litigation and makes the asset transition easier by ensuring that assets pass per your wishes. Without an appropriate will, trust or beneficiary designations, statutes that vary by state may stipulate distributions different than you'd envisioned, even within families.
Who creates and administers wills and trusts
Estate planning attorneys typically prepare documents such as a will and/or trust, financial and healthcare powers of attorney, advance directives for healthcare decisions in the event of disability or incapacitation (known as a living will) and even directions for bequests or planned charitable giving.
A grantor's wishes are usually carried out by a named executor or a corporate trustee, such as Sears, who can act from a neutral or non-biased perspective. Unlike a family member or friend serving as trustee, a non-biased trustee can make decisions regarding distributions without emotion, helping to keep true to the trust's instructions and the grantor's intent.
Then once the documents are completed, experts recommend making their location known to a trusted friend or advisor. These documents also should also be reviewed every three to five years or as life changes due to illness, divorce, death of an heir, etc.
Where ends justify means
Having assisted clients and families with many uncomfortable and unnecessary situations, Sears recommends acting as soon and decisively as possible.
"You owe it to yourself and your loved ones to document your intentions—and to save everyone the heartache and expense of your not having done so."
. © 2024 BOKF, NA.