Part 1 in a series of articles written by Joanne Seminara, Esq.
When a famous person dies, the public often learns little about what was left in their estate. Sometimes, however, all the messy details wind up in the press. As a practical matter, whether or not an estate story becomes public knowledge may depend on whether the celebrity settled his or her estate with a Will or with a Trust. Trusts are almost always private documents. Wills often require more notification to others and must be filed in Court.
Does that mean only celebrities need Trusts to protect their privacy? Even if the newspapers do not care about what’s in your estate and what you left to whom, your family members likely will care, especially if they were left out. How will they find out? Well, if your estate will be distributed through a Will, the law says that anyone who might be in line to inherit has to be notified so that they have an opportunity to object to the Will. Thus, anyone who values their privacy in this regard can benefit from a Trust.
There are many other good reasons that a Trust may be the best way to distribute your estate. In fact, depending on your relationship with the persons or organizations to whom you wish to leave assets after your death, your long-term care needs and the nature of your assets, a Trust may be a “must.”
To understand why a Trust may be a “must” you need to understand the possible pitfalls of using a Will to settle an estate in certain situations.
A Will must go through the process of “probate” in order to transfer your assets to those designated in your Will. In probate, a Will is validated and the Executor named in your Will is appointed by Surrogate’s Court order.
Once appointed, the Executor can represent the Estate: collect and liquidate estate assets, pay debts and taxes, and eventually pay out the estate among the beneficiaries named in the Will. But many of our clients are very surprised to learn that even the consent of, or notice to, persons who will inherit nothing under their Will must be obtained before the Court will issue an order of probate.
Before an order of probate is issued by the Court, an estate attorney must obtain the written, notarized consent to the probate of all those persons who were your natural heirs. Natural heirs or “heirs-at-law” (or next-of-kin) are those persons that state law dictates would get your property if you had no will or died “intestate.” That is, your natural heirs must agree with (or at least not challenge) your Will and your choice of Executor.
If you are leaving your estate to your natural heirs, say, to your spouse and children, getting this written consent will not be a problem because you are leaving your estate to the same people who would get your property if you had no Will. However, if you are not leaving property to all your next-of-kin, or in amounts less than they would get under the “intestate” law (or leaving them less than they expected) these persons may have no incentive to consent in writing to the probate. Moreover, if they are upset to learn that you have left them nothing, things could get worse. They could file an objection to the probate of the Will. And this is where the story gets much more complicated, lengthy and expensive.
Even if such persons have no reasonable prospect of overturning your Will they can tie up a court proceeding for months, or even years, with one or more baseless claims about the validity of the Will.) For example, if you are single and childless and your next of kin are your siblings or the children of your predeceased siblings and your Will does not give your assets to all these persons, (called “intestate distributees”) your Executor or her attorney must notify them of the probate of your Will, provide them with a copy, and attempt to get their consent to probate. So, first they must be located! If they cannot be found and their consent obtained then a “Citation” will have to be delivered to them to give them the opportunity to appear in Court to object to the probate. Assuming you left your Executor the current addresses for all of these distributees, just the process of serving each distributee with a Citation and proving to the Court that this has been done can take months. (And that’s assuming you don’t have relatives who live abroad!) Then, if an objection to probate is filed by one of them it must be formally answered in Court, which could be just the beginning of years of delay, the worst case scenario being a full-blown Will contest trial.
Ever see a dilapidated empty house with overgrown weeds and boarded up windows that languish for years? Chances are the reason it’s empty and hasn’t been sold is that it is tied up in court proceedings.
On the other hand, if you create a Trust to transfer your wealth upon death and it is carefully drafted and funded with all your assets, your estate can avoid probate. There is no requirement to notify any persons who will not inherit your assets under your Trust. Perhaps most importantly, a Trust, because it need not be filed in Court to take effect, is a private document shown after your death only to those persons who will receive a share of your assets. The opportunity of a challenge to your wishes is greatly reduced and the cost of settlement of your estate will likely be less. Most importantly, your assets will be distributed to your beneficiaries months or years earlier than if you passed them through the Will probate process.
This is only one reason why a Trust may be a “Must.” More reasons Trust planning is recommended in certain circumstances will be covered in future articles.
Additional resources provided by the author
March 30, 2017
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