Everyone needs a will, but it is important to understand what type of will to use and why to use it. I am a proponent of trusts. In my mind it is a good idea for everyone to have a living trust. The advantage of a trust over a will is that assets and property transferred by a trust don’t have to go through probate at your death, saving lots of time and money. However I want to tell you that just because you have a living trust you still need a will. You might find yourself thinking, “But I thought a living trust served the same purpose as a will. Don’t they both transfer property to at death?” Yes that is true. But even if you make a living trust, you should make a will as well. There are two main reasons.
A Will Can Do Things a Trust Can’t
Everyone needs a will because it can do some important things that a trust can’t do. A trust cannot name guardians for your minor children. Only a will can name guardians. Naming a guardian is important. It is better for you to pick the people who can best serve as a guardian than for a judge to do it. The judge doesn’t know your children or the people who would be the guardians. He cannot take into account personality conflicts or nurturing traits.
You can only leave funeral and other final instructions in a will. You can’t leave them in a living trust. Some folks prefer to leave these instructions in a separate letter, but they can be put into your will. You can also use a will to forgive (cancel) debts owed to you, something that isn’t generally done in a trust document.
Another reason to write a will is that it can transfer property for trusts that are unfunded. That means that it will cover property you have neglected to transfer, in writing, to your trust. It is not uncommon to forget to transfer something to a trust. When you forget to transfer ownership of property to your trust, that property won’t pass under the terms of the trust document. It will need to be probated, but the will gives direction to the Court about your desires.
What Type of Will is Needed?
If you are just using a will to pass your property you can use a general will. It you choose this type of will, when you die everything will be probated. However, if you use a properly funded trust as your primary way to leave property, all you need is a “pour-over” will. This is a fancy name for a will that is so named because it directs that all your remaining property be poured over into your living trust. That property must still go through probate on the way to your trust. Pour-over wills also name guardians and take care of other items that a trust doesn’t.
It is accurate to say that everyone should have a will, but it is usually best to use the will and trust combination. If you wish to find out about other fine points of estate planning I cover all of these topics in my book, Protecting Your Financial Future.