“He said that there was death and taxes, and taxes was worse, because at least death didn’t happen to you every year.”
Terry Pratchett, Reaper Man
As cruel as this title sounds, it is for certain we are all going to die but before we do, we are going to pay taxes all our lives. Interestingly, there is a bar in Reno, the city where I live, by the name of “Death & Taxes”. If you are reading this and you are a local, is probably a good idea to visit this bar in midtown and enjoy one of their signature drinks like the “After Glowing” or “Straight to Hell”. I am sure these drinks will help you understand what is awaiting us all. Nobody wants to talk about probate law, who wants to plan for after death…the before death part is hard enough, right? Unfortunately, the reality is that it is better to plan while we are still part of this world. First, if you die intestate, meaning without a will, things can get complicated quickly, and the probate process could go on for years. On the other hand, if you have a will, while the estate still has to go through probate, the process is much easier because all your wishes are contained in the “Last Will and Testament”, and also a Special Administrator of your choice is designated to make sure things go the way you planned. A will is effective only after you die, it has no effect before and can be modified.
You also have the option to do a Trust. Trusts can be revocable which means that you can change the terms in the document at any time or irrevocable which means no changes are allowed. The most common trust is a Revocable Living Trust. These don’t go through probate and are effective as soon as the document is signed. The big question is what is the difference between a will and a trust? As stated above, a will becomes effective after death and a trust is effective as soon as it is executed. Now let’s say that you become mentally disabled, and you have a will. Because a will is only effective after death, your family will have to request the court appoint a guardian to handle your affairs until death. On the other hand, if you have a trust, you can provide names of trustees to manage your affairs in case you become incapacitated. However, if you have minor children, you need a will to designate a guardian for them in case something happens to you. As you can see wills and trusts are very different and depending on the specific scenarios, either a will or a trust will do a better job.
Many opt for having both, that way there is a better understanding of all details. In my opinion, it is a good idea to have a Revocable Living Trust together with a Will. Even if you have a will or a trust or both, it is important to have a durable power of attorney for healthcare decisions and a medical directive. You always want to be prepared for the unknown. I understand this is not a pleasant subject, but it will be even less pleasant to deal with a big mess having to pay attorney’s fees and causing even more pain to your loved ones if you put it off too long. I did a probate from start to finish few years ago, it was an estate of a person that died intestate. I learned a lot during the process and have to admit it went smoother than I thought, however, it took a little over a year and a half. It was a smaller estate of $500,000 but still, lots of work. I had to do all the financials and inventory for the court, sell the real property, distribute personal property, pay all debtors and special administrator, and then distribute the residual among the heirs. The process went well because the parties agreed, making things so much easier, however, that is not always the case. I did this probate because my former boss was friends with one of the heirs and he offered to help, but I was the lucky one that ended up doing all the work. While the attorney’s fees were minimal because of the friendship between the law firm and the heir, the attorney’s fees and costs of probate can easily escalate very quickly.
So even though is hard to plan these things is better to do it sooner than later! Do you have a will or a trust? If you don’t, what are you waiting for?