A comprehensive estate plan is one that includes all the documents necessary to handle the affairs of the person if they were to die or become incapacitated today. That means that any funding which needs to be done is done.
In the very simplest of plans, that could mean having powers of attorney in place to address incapacity and beneficiary designations, transfer on death (“TOD”) designations, or joint tenancy to handle financial accounts and other assets. Of course, a will would round out the simplest of plans to handle any other assets and to nominate guardians for minor children.
However, the simplest of plans is likely not an appropriate plan for the vast majority of people and situations. Such a plan would not provide:
- Continuing asset management for beneficiaries
- Divorce protection for beneficiaries
- Asset protection for beneficiaries
- Remarriage protection for a surviving spouse
- Estate tax protection for beneficiaries, etc.
Further such a plan could expose the assets to the creditors of the other joint tenants.
With trusts, you could accomplish all of the above, without having assets subject to the creditors of others. In addition, a trust can avoid the publicity and expense of the probate process. But, the probate avoidance benefits only occur if the trust is funded before death. If the trust is not funded before death, then the assets which are in the estate will have to go through the probate process prior to being poured into the trust via the will. A revocable trust is the keystone of a robust, comprehensive estate plan. Funding is the key to making that keystone work as intended.
A good estate planning attorney will make sure that the client has a comprehensive estate plan in place to accomplish their goals and that it is funded.
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555