In 2012, at the age of 77, my mother passed away unexpectedly. We had just helped her move from St. George to South Jordan, Utah, where she could be closer to her children and grandchildren. Being that her mother had lived a relatively healthy life for nearly 102 years, we thought Mom would be around for a while longer. ‘Twas not to be.
None of us has an expiration date stamped on our label but that day is inevitable. Though the timing of Mom’s death was a saddening surprise for us, some important preparations fortunately had been made. There was a will and a trust. An executor and a trustee had been named. The new home was transferred by quit claim to, and other assets put in, the trust. Assets could be managed and distributed to the beneficiaries, money could be accessed, expenses paid, and, most helpful of all from my perspective, probate avoided.
As trustee, I had authority to, among other things, contract with a realtor and sell the home, receive all income in respect of the decedent, and retain a CPA to file the final income tax return. All the companies and people I dealt with as trustee were very kind and considerate but everyone expected to be paid any amounts due, including and particularly the IRS.
Recent events witnessed and reported reinforce the need to prepare. At minimum, you ought to have a will, especially if you have young children. Through a will you appoint a guardian to care for your kids if you are gone. Choosing one is of course a very consequential decision. You should consider parties who love your kids and are willing and able to do the task. When nominating a guardian, it is not required to have only one person. Co-guardianships are commonly drafted. Also, the guardian does not necessarily have to or want to manage the money you leave behind. It is a matter of personal preference, but structuring your estate so that the trustee manages the money and the guardian manages the kids can be advantageous for everyone involved.
If you own a home, at minimum you should have a living trust. Then the home does NOT have to go through the probate process upon your death. Probate is not always time-consuming and expensive, but it will be longer and more expensive than setting up a living trust now and putting your home in it (and it is all private)! Like I was able to do for my mother’s estate, when you pass away the trustee can continue managing the home while determining how and when to sell the property. You can preserve more of the home’s value by eliminating the need for a “fire sale.” I kept the house in the trust for a few months until Spring approached and then sold for a very reasonable price.
I am grateful to my mother for a thousand things, one of which is that she had her attorney-son draft a will and trust for her (at a terrific “friends and family” discount!) I estimate we saved at least $5,000 in court costs, attorney’s fees, and other related expenses, and probably four or five months time, by having a living trust.
So, ask yourself a few simple questions. Have you done what you can to lessen the pain and problems that will come for your family upon your passing? Will property flow how you want it to and to the people you want it to? Will your personal affairs remain private? Will your loved ones know your wishes? Will your minor or special- needs kids have someone to care for them?
Are you ready?