This is an introductory post to what I plan to present over the course of the next several weeks.  As such, it only grazes the surface of the area of Business Continuity Planning.

Mainstream Business Continuity Planning

In many circles, Business Continuity Planning (BCP) is what organizations (partnerships, limited liability companies, corporations, and government agencies) do to ensure that internal and external “threats” (i.e. storms, power outages, data destruction, crime, etc.) are planned for and that specific instructions are in place to minimize the impact of threat becoming reality.  In depth BCP of this sort is usually reserved for large corporations with multiple facilities around the nation or world and is typically used in connection with data and information systems and disaster recovery. (See: http://en.wikipedia.org/wiki/Business_continuity_planning)

Legal Business Continuity Planning

At a foundational level, the definition of “Business Continuity” in legal circles is much the same as the mainstream.  In other words, Business Continuity is a roadmap for ensuring that your business will continue to function despite the “threat” (to borrow the term) of some disastrous occurrence.  In legal Business Continuity Planning, “threats” are different in nature but are no less impactful on the day-to-day operations of your organization.  Some examples include: 1) death of a partner or member; 2) retirement of a partner or member; and 3) divorce or other change in family status.  And while this list is not intended to be exhaustive, it shows that there are very real, everyday things that can greatly impact the operation of a small business.

This begs the question, “How do I put a ‘legal business continuity plan’ in place?”  The following is a list of things you can do, and I will discuss the benefits and drawbacks of each in future posts:

1.     Include your intentions with respect to what happens to your business in your Estate Plan.  *This should not be a sole means of establishing business continuity.

2.     Have an Operating Agreement in place for your limited liability company (LLC). 

3.     Include lifetime Buy/Sell provisions in your Operating Agreement.  This should be part of any operating agreement, but . . . that doesn’t mean it always is.

4.     Establish a stand-alone Buy/Sell Agreement and life insurance policies to fund the buy-out.  There are many intricate details involved in this type of solution.

It is recommended that whatever your business situation, hire a qualified attorney in your geographical area to advise you on your continuity plan.  While you may save a few bucks by doing it yourself, almost invariably you get what you pay for.

Next Week: Business Continuity provisions for your Estate Plan.

DISCLAIMER: This website is for Informational Purposes only.  The information provided is not comprehensive, does not constitute legal advice, and does not create an attorney-client relationship.  If you need legal advice, please contact an attorney in your local community or State.

"Cloud" security is a major concern in the world today.  For lawyers, that concern is compounded by the ethical obligations that come with storing or sending confidential client data or communications in the cloud.  For those unfamiliar with tech-speak, “the cloud” is merely a clever marketer’s term for the Internet (or “the web”).  Or, maybe it was just another of Al Gore’s inventions. 

The inspiration for this post (although not in line with my previously intended topic) came from a recent CLE event I attended.  More specifically, Ethical Rule 1.1. (Competence) as it relates to Cloud Computing and Arizona Ethics Opinion 09-04.  This post is not intended to address Rule 1.6 (Confidentiality); although, there are rumors that the Arizona Bar is all but endorsing cloud solutions for attorneys – but that is a topic for another day.

The above-mentioned Opinion states that lawyers either need to become competent regarding computer security or consult available experts.  But WHO are “the experts?”

A well-established and respected attorney seated behind me at the aforementioned event passionately exclaimed “. . .  there is Nobody that knows this stuff!”

No one else in the room disagreed.

But, there are people who know this stuff.  And they’re not out of reach.

If anyone reading this post was there, and even for those who weren’t, I hope this provides some useful and interesting information.

THE RULE:

Ethical Rule 1.1 (Competence) states that: “A lawyer shall provide competent representation to a client.  Compentent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation.”

Further, Ethics Opinion 09-04 states:  “. . . It is also important that lawyers recognize their own competence limitations regarding computer security measures and take the necessary time and energy to become competent or alternatively consult available experts in the field.  The competence requirements of ER 1.1 apply not only to a lawyer’s legal skills, but also generally to “those matters reasonably necessary for the representation.”  Therefore, as a necessary prerequisite to making a determination regarding the reasonableness of online file security precautions, the lawyer must have, or consult someone with, competence in the field of online computer security. . . “

THE PROBLEM:

The problem with the ethical rules as they deal with technology is actually three-fold.  First, lawyers are not technologists (at least not most of us).  Second, “reasonable” is ambiguous, open-ended, and can be used as a sword or a shield.  Third, lawyers are cheap – be it by necessity or choice. 

i-d-10-t Error?

Perhaps the Section Title is a bit harsh.  But, as a rule, lawyers just don’t get technology (and, consequently, may not get the joke referenced in the section title either).  Prior to becoming a lawyer, I spent more than 10 years in the IT industry.  During that time I worked at virtually every level of data management and security – from the end-user’s desktop computer to the mainframe systems in a worldwide data center.  I also spent several years supporting my company’s in-house legal department.  I witnessed, firsthand, that brilliant attorneys could be crippled by relatively minor changes in their computing environment.  Let’s face it; lawyers don’t want to be bothered with technology.  They just want it to work.

Does this make them incompetent?  For purposes of Rule 1.1 - Maybe.  Does it make them incapable?  Certainly not.  Technology moves and evolves extremely quickly.  It is the lawyer’s job to stay abreast of benefits and risks of their employed technologies.  To some lawyers this may mean devoting time to reading manuals, publications, or forum discussions; for others it could mean asking a trusted and qualified professional to explain – in lay terms – the available options.  And there is a world of options – whether they are in-house data systems or cloud-based solutions.  Either way, it is the attorney who must comply with the Rule in spite of any techno-phobia.

IllegalAccessException()

We (lawyers) love to find the exception to the rule.  "Reasonable" is ambiguous.  And ambiguity is a breeding ground for exceptions, loopholes, excuses, rationalization, and, sometimes, willful inaction.  The irony here is that malicious users and would-be hackers are playing a similar game – looking for loopholes and exceptions in security code. . . oh, and violating the law.

With respect to the condition “. . . or alternatively consult available experts in the field” many of my colleagues are likely to say “I hired an IT guy to come in and set up all my stuff.  I think that qualifies as reasonable.”  Or, “I use <insert your cloud providers name here> and they specialize in providing solutions to law offices.  I think that qualifies as reasonable.”

Both of these things may be true and may easily satisfy the requirement under Rule 1.1, but have you understood your IT professional or service provider?  Do you really know what you have?

Did you know what questions to ask? 

Has he or she explained to you what they have done and why? 

Did you hire or rely on someone who appears to be brilliant, but can’t string two coherent sentences together when it comes to describing what they’ve implemented for you?

Is your “IT professional” a friend’s high-school-age son or daughter who “knows a lot about computers?”

While I am not disparaging the talents, abilities, and understanding of others, hiring people who do not or will not explain to you what they have put in place (in a language you can understand); OR hiring less-than-qualified individuals to save a few bucks may not be an exercise of “reasonable competence” when it comes to securing your client’s data. 

My point here is – hire a reputable firm or professional that communicates with you and will withstand any scrutiny related to whether it was reasonable for you to rely on them.  They do exist. 

In terms of what to look for, I have the following recommendations –

1. Certifications do not make a competent IT professional.

In general, I don’t place a lot of stock in certifications.  Don’t get me wrong, they have their place, but in many instances the requirements to take certification exams are not very strict.  I know that there are many people who use them as a starting point for their IT careers – myself included – but just because a person understands the technology, does not mean they understand the legal or business implications of your data systems.

On the other hand, some certifications (such as the Certified Information Systems Security Professional) require years of experience in the industry prior to even qualifying to sit for the certification exam.  These types of certifications indicate a commitment to the profession as well as a level of technical competence and are very credible in my opinion.

If an IT professional touts his "certification" as his "qualification," make sure and do your homework on what is required to acquire that credential.

2. Don’t be too wowed by the techno-speak.  Make your IT professional speak English.

It is easy to listen to someone dazzle you with the terms that seem very “techno” – which, obviously means they know what they’re doing, right?  Wrong!  In one position that I worked, a co-worker (yes, a fellow “IT Professional”) asked – “where do I find the drivers to allow a CD player to read DVD’s?”

Hmm.  For any that aren’t laughing – CD players and DVD players are physically different – i.e. different physical machinery.  A “driver” is a piece of software that allows the computer to properly connect to and use a device.  Thus, a driver (being software) will not alter the hardware (being physical machinery).  This was pretty basic.  But it was a trained IT professional that was asking the question, and the customer whom he was serving didn’t have the foggiest idea of how ridiculous the question was.

3. There are solid and even exceptional professionals at reasonable prices in every career field.  Find someone you trust and use his or her services.  (More on how to find and determine who is “good” in future posts).

Frugal to a Fault?

Even in a vibrant economy lawyers have a reputation for extreme frugality.  Is that “reasonable?”  The real question here is based on risk/reward or cost/benefit. 

Some lawyers and firms can afford to implement rigid (and expensive) security technologies.  Often they are left questioning whether the investment was worthwhile.  This may be because discouraged exploitation attempts cannot always be measured.  Who knows how many would-be hackers passed them by looking for easier targets.

On the other hand, most of us who choose not to implement expensive technologies practice in small firms or as solo attorneys.  We either can’t or won’t afford the bigger, more complex systems.  This may be because we don’t have the time or money to spend to be able to understand them.  System security aside, it is often our time that prevents our understanding.  We don’t want to spend what could be billable time doing non-billable stuff.  Driven by the need or desire to be billing, we feel that it would not be “reasonable” to spend the time or money required to fully understand our information systems. Although there are no specific implementation requirements, presumably, what the bar does require is – if you can’t afford a consultant, spend the time to research it yourself.  Conversely, if you don’t have the time or interest to research it yourself, make sure you consult with someone who does. 

THE TAKE AWAY:

"Competence" regarding your data systems is not out of reach;

Your technology may not be as “reasonable” as you think; and

Your IT Professional does not have to be expensive.

*********

Biographical info: Mr. Cox’s pre-law experience includes more than 10 years in IT operations, data, and network management.  He has worked with all levels of consumer and Enterprise systems and now practices law in Mesa, Arizona.  Mr. Cox is available for questions via the online contact form, or via telephone at the number shown at the top of this page.

DISCLAIMER: This website is for Informational Purposes only.  The information provided is not comprehensive, does not constitute legal advice, and does not create an attorney-client relationship.  If you need legal advice, please contact an attorney in your local community or State.

I recently conducted an informal survey amongst my family and friends with respect to estate planning.  I asked two main questions.  The first was, Do you have an estate plan?  The second was, Why?

My goal was to be able to compile a "top ten" or "top five" reasons why or why not.  Some of the answers didn't surprise me. Some of them did.  My surprise, I think, was primarily based on who the responses were coming from.  Not because anyone I surveyed falls into the category of the "uber-wealthy," nor because anyone falls into the category of "totally destitute."  We are, for the most part, middle-classers - Average Joes just trying to survive from day to day and year to year.

I was also surprised that, when it came to why someone does not have an estate plan, the answers actually fell neatly into five main categories.  Before I provide the answers, let me begin by qualifying what I mean by "estate plan."  I mean some legal vehicle or mechanism whereby provisions have been made to distribute assets or care for individuals in the event of your death.

That said, the top 5 reasons why an estate plan has NOT been done were:

1. Time - either too busy, or just haven't taken the time to understand what can or should be done.

2. Lack of Assets - either there are no assets, or the respondent did not feel like there were enough assets to justify doing anything about them;

3. Cost - either the cost seemed to outweigh the benefit, or just assumed the cost would be prohibitive within their current budget.

4. Lack of Understanding or Education - either didn't know what estate planning really entails, or there was some lack of understanding with respect to a particular law or set of laws;

5.  Outdated Estate Plan - have an estate plan or some estate planning mechanism that has not been reviewed for a long time.  *I placed this under the reasons why an estate plan is NOT done because an outdated estate plan, in some instances, could be just as bad as not having one at all.

In reality, there are probably as many reasons why people don't have an estate plan as there are people.  We're all different.  Our lives and circumstances are different.  Our reasons will be different.  But these are a few of the most reliable excuses that I found.

Today I will talk about Reason #1 - Time.  In subsequent posts I'll address the other four.  But for now let's explore our busy lives and routines.

I read another, very well written, blog today.  The title was "The 'Busy' Trap."  What a great article.  It talks, generally, about how we sacrifice our daily existence for being "busy."  How we use the term "busy" like a badge of honor.  And the response we get when we respond to the common inquiry, "how are you doing?" with "Busy!" "So busy."  "Crazy Busy." is usually something of a congratulatory compliment: "That's a good problem to have."  Like we're saying, "Congratulations on being so busy that you don't have time to talk to me."  Its weird when you think about it.

Truthfully, when was the last time we felt good about being blown off?  "So busy," as a response, personally, puts me into a mode where I feel like I shouldn't be taking any more of that person's time.  Or makes me feel rushed and unimportant.  Yet, in general, we congratulate and compliment people for it.  It's almost like saying, "thank you for making me feel stupid for taking your time."  But, I digress.

Anyway, the point is that the busyness of everyday life often gets in the way of accomplishing those things that are most important.  I have heard it said (although I do not recall an exact source) that very few people on their deathbed will remark, "I wish I had just been able to <insert the mundane daily/business task of your choice here>."  Many, however, will remark, "I wish I had spent more time with <insert the person's name, or group of people, of your choice here>."   The point is, when we truly reflect on what is important, people and relationships almost always are where we end up.  The time we did spend.  The time we didn't spend.  The care of those people who are most important to us.

In truth, estate planning takes very little time, but has the ability to bless or curse our heirs well into the future.  Depending on the complexity of your particular circumstances, that time will vary.  Time invested could range from one hour to 20 hours or more.  However, the time invested is not likely to leave you questioning how your spouse, children, or grandchildren will be cared for.

I once worked with a client whose spouse had passed away.  The dying spouse - who had a terminal disease - had literally spent his final few days preparing tax returns in an effort to leave all affairs in good order and to care for his wife.  It truly was touching.

The point being, time is really all we have.  Don't fall into the "Busy" Trap and forget what is most important - time, relationships, and caring for those we love.  Take the time.  Make the time.  Speak with an estate-planning attorney in your area to understand what vehicles make sense for your situation.  An adequate estate plan  - be it a simple will or a complex trust - is really our final way of saying, "I love you," to those we care about (the Leona Helmsleys of the world aside).



DISCLAIMER: This website is for Informational Purposes only.  The information provided is not comprehensive, does not constitute legal advice, and does not create an attorney-client relationship.  If you need legal advice, please contact an attorney in your local community or State.

In my last post I said that I would talk about estate planning vehicles that may be appropriate for different stages of life - Early Adulthood, Mid-Life, and Empty Nest/Retirement.  In the interest of keeping it concise, I've decided to provide only a bulleted list with brief explanations.  Some of the items are identical from one stage of life to the other - I apologize, upfront, for the additional length, but it seemed better to be able to hit a section and get all the information than to say "See above" and make readers scroll all over the page to get to the information.

Also, by way of explanation, probate assets are those that are subject to administration by a probate court in order to re-title them into the name of your intended heir, beneficiary, or devisee.  Non-Probate assets are those that do not require court administration for re-titling.  Some examples of non-probate assets are: 1) accounts that have a named death beneficiary (for example life insurance); 2) jointly held accounts/property; and 3) assets owned by a Trust.  

 

Early Adulthood:

Life Situation:

Not a lot of assets.  Young.  Healthy.  Immortal.


Estate Planning Considerations:

- Will - a simple will stating how you would like assets devised may be sufficient. If your probate assets are substantial, a revocable trust may be a better option - in which case, refer to the "Mid-Life" section below.

- Health Care Power of Attorney - This designates an agent to make Health Care decisions for you if you are unable to decide for yourself.

- Living Will - to put it not-so-delicately, this determines whether and when you want the plug pulled if you are on life support.

- Mental Health Care Power of Attorney - this designates an agent to make mental health care decisions if you are mentally incapacitated.

- Health Care Directive - In Arizona - as with many other states - you can put your Living Will, Health Care Power of Attorney, and Mental Health Care Power of Attorney on file with the State.  The State then provides a wallet card.  Assuming no other options are available and you are unable to communicate your wishes, the hospital may access your information from the State registry.

- Final Disposition Instructions - this is merely a written set of instructions respecting whether you wish to be buried or cremated, where you want to be buried, how you want your ashes cared for, and so on.



Mid-Life:

Life Situation:

Building assets.  Married/Domestic Relationship.  Children.  Less-Immortal.


Estate Planning Considerations:

- Trust - Usually a revocable living trust is an appropriate vehicle at this stage, but other trust options may also be warranted.  A revocable trust is one that can be revoked at any time by the Grantor/Trustor/Settlor (i.e. - the person who set up the trust; i.e. You).

- Pour-over Will - This type of will has the effect of moving property that does not belong to the Trust before your death into the Trust after your death.  A Pour-Over Will will also include provisions for guardianship of minor children and other important elements.  This Will will need to be probated, but may be simplified greatly if assets that would otherwise be "probate assets" are properly transferred to your Trust.

- Durable Power of Attorney - This is a Power of Attorney that gives very broad powers to the person you elect.  Generally, this gives your agent the power to step into your shoes and act - in a legal sense - as you in virtually every situation.  For example, to manage your personal finances, to manage a business, to buy and sell property, etc.  Generally, because of the amount of power given, I recommended using a "springing" power of attorney.  "Springing," means that it only becomes effective after a certain event.  Typically the "event" is mental or physical incapacity.

- Health Care Power of Attorney - Who makes Health Care decisions for you if you are unable to decide for yourself.

- Living Will - To put it not-so-delicately, this generally is the document used to state your wishes with respect to whether and when you want "the plug" pulled.

- Mental Health Care Power of Attorney - Who makes care decisions if you are mentally incapacitated.

- Health Care Directive - In Arizona - as with many other states - you can put your Living Will, Health Care Power of Attorney, and Mental Health Care Power of Attorney on file with the State.  The State then provides a wallet card.  Assuming no other options are available and you are unable to communicate your wishes, the hospital may access your information from the State registry.

- Final Disposition Instructions - This is merely a written set of instructions respecting whether you wish to be buried or cremated, where you want to be buried, how you want your ashes cared for, and so on..


Empty-Nest/Retirement:

Life Situation:

Growing assets.  Married/Re-Married.  Children.  Grandchildren.  Mortal.


Estate Planning Considerations:

- Trust (Revocable or Irrevocable - again, the choice depends on how trust assets are to be distributed to beneficiaries, the size of the estate, and other considerations).  Being more firmly established, it is easier to see what your estate involves, and also to determine exactly where and how you want your estate distributed.  The most appropriate option should be discussed with your estate planning and tax attorney to ensure the best outcome.

- Pour-over Will - This type of will has the effect of moving property that does not belong to the Trust before your death into the Trust after your death.  A Pour-Over Will will also include provisions for guardianship of minor children and other important elements.  This Will will need to be probated, but may be simplified greatly if assets that would otherwise be "probate assets" are properly transferred to your Trust.

- Durable Power of Attorney - This is a Power of Attorney that gives very broad powers to the person you elect.  Generally, this gives the person to step into your shoes and act - in a legal sense - as you in virtually every situation.  For example, to manage your personal finances, to manage a business, to buy and sell property, etc.  Generally, because of the amount of power given, I recommended using a "springing" power of attorney.  "Springing," means that it only becomes effective after a certain event - usually if you become mentally or physically incapacitated and can't do things for yourself.

- Health Care Power of Attorney - Who makes Health Care decisions for you if you are unable to decide for yourself.

- Living Will - To put it not-so-delicately, this determines whether and when you want the plug pulled if you are on life support.

- Mental Health Care Power of Attorney - Who makes care decisions if you are mentally incapacitated.

- Health Care Directive - In Arizona - as with many other states - you can put your Living Will, Health Care Power of Attorney, and Mental Health Care Power of Attorney on file with the State.  The State then provides a wallet card.  Assuming no other options are available and you are unable to communicate your wishes, the hospital may access your information from the State registry.

- Final Disposition Instructions - this is merely a written set of instructions respecting whether you wish to be buried or cremated, where you want to be buried, how you want your ashes cared for, and so on.



DISCLAIMER: This website is for Informational Purposes only.  The information provided is not comprehensive, does not constitute legal advice, and does not create an attorney-client relationship.  If you need legal advice, please contact an attorney in your local community or State.

When is the best time to create an estate plan?

From its inception in 1908, the Boy Scouts have lived by a two-word motto, “Be Prepared.”

The direction that you can go with this is both singular and diverse.  Being Prepared, in general terms, means that you are ready for life’s obstacles, circumstances, or events – whether expected or not.  Being Prepared for specific events can mean a million different things to as many different people.  In the area of estate planning, being prepared means that you are prepared for one of life’s only certainties – death.

Death may be certain, but the timing is not.

Perhaps one of the biggest obstacles estate planning attorneys face is convincing young, healthy, prime-of-life clients that estate planning is important.  The main reason for this dilemma is that young, healthy people to one extent or another have not come to fully comprehend their own mortality.  When I was still invincible I was playing in a men’s hockey league.  Our goalie was . . . less than experienced . . . and as a result an extra burden was felt by our defensive players (of which I was one).  On one fateful shift an opposing player was at the face-off dot about to score.  Enter the hero.  Skating toward the corner at full speed I dove in front of the shot (not recommended).  I slid shoulder first into the boards.  When I stood up, I thought my right arm was going to fall off.  But, being a real tough-guy (i.e. invincible), I still went out for another shift.  It wasn’t until I actually tried shooting the puck that I realized the extent of my injury.  Instead of a quick wrist shot that sent the puck into the upper corner of the net, I dribbled off a weak shot that barely reached the skate of the defender in front of me.  The searing pain sent me stumbling to the bench.  Although not dislocated, my shoulder was separated.  I was 26, and for the first time in nearly 20 years of playing hockey, I suffered an injury that took me out of the game.    I was mortal.  I could be hurt.

Later that year – in a manner substantially less cool (distracted by a cell phone) – I rolled my car in the middle of the interstate during rush hour traffic.  Fortunately I walked away from that one.

The point being, we are all mortal, and we are all involved in incidents and accidents that remind us of our mortality and that life is fragile.

If we are unprepared for that eventuality, it is possible – and likely – that your estate, be it worth $2.00 or $2 million, or $200 million will fall entirely under the control of the State in which you died or where your property is located.

When we are young we typically don’t have a sizeable financial estate.  However, what many of us do have (or will have, or hope to have) are children.  And our children’s fate could just as easily be left for the State to decide if we fail to make preparations and designate a guardian.   Do we really want “Judge Wapner” – who doesn’t know us or our family from anyone else – determining who the best person to take care of our children is?  Most of us would say no.

My son recently went on a Boy Scout campout.   He did not pack a tent.  In Arizona, it’s usually not critical to have a tent to ensure staying dry in the night.  Camping under the stars is actually quite common here.  However, he learned the hard way that having a tent and not needing one, is a whole lot better than needing a tent and not having one.  It rained all night.  Sandwiched between two tarps; trying to use them as a type of water-proof blanket, he and two other Scouts huddled together while it rained most of the night.  With no way to keep himself or his equipment dry, he had a miserable time. 

He went on another campout last weekend.  He was so excited because he was determined to be prepared.  He packed every item on the list given to him by his Scoutmaster – right down to the disinfectant wipes.  The outing involved a six-mile hike to their overnight campsite.  His pack was heavy and it took work to get up the mountain to the campsite.  But when the time came, he had everything he needed both for his safety . . . and comfort.  The work paid off.  The effort came to its intended fruition.

He was prepared!

Just like with my son, being prepared does take more work.  It will take more effort.  But the peace that comes from having taken the time and endured the expense will far outweigh the cost of failed or inadequate preparations.

To answer the question in the title:  the time to think about estate planning is now.  You don’t have to solve the world hunger problem with your estate plan.  But ensuring you have what you need is critical to ensuring that when you get to your final “campsite,” you are not left with a “tarp” when a “tent” was most needed.

(I will discuss what estate planning vehicles may be most appropriate at different stages of life in my next post).

DISCLAIMER:

This website should only be used for informational purposes. It does not constitute legal advice, and it does not create an attorney-client relationship with anyone. If you need legal advice, please consult an attorney in your community.

My thoughts on a full estate plan vs. a simple will are these:

First, there are all kinds of different trust vehicles that have different features that allow for estate tax shelters, etc.  The one I focus on here is a simple probate-avoidance trust.

Most of us think of a trust as being for the uber-wealthy who are trying to keep that wealth from ending up in the government's hands.  However, a trust is really a vehicle to keep what might otherwise be a probate estate asset out of probate court.  Probate is simply the process of having the court determine who gets control over the probate assets - i.e. a personal representative/executor.  The problem is, that before the court will allow the PR/Executor to do anything with any of the probate assets, the executor has to petition the court, be appointed by the court, then publish notice to creditors (and creditors have 4 months to respond).  The whole process - in a simple case - will take approximately 6 months.  All the while, the assets are essentially in a frozen state.  With a trust, those assets that may otherwise be considered "probate assets" are actually titled in the name of the trust - not the deceased person - and so their use and disposition are controlled by the terms of the trust.  And the trust doesn't have to go through any type of court proceeding, so the trust beneficiaries are not subject to having assets "frozen" or tied up in a probate court proceeding.  Additionally, if your probate assets - your home, your cars, personal property, bank accounts, etc. - total more than $50k, then your estate is subject to probate.

It may be that most of the assets that would pass from you to your spouse or other family are currently in the form of life insurance, 401k, IRA's, or other similar vehicles.  Typically these are non-probate assets.  However, if you have other property it would still be tied up in probate and create additional expense in terms of lawyers fees (I hate those guys:), court costs, etc.

With all of that said, just having a will is better than nothing at all.  But, a will - in the long run - can be more expensive than a trust because of the backend probate costs.  Also, as long as you are alive you can buy, consume, or dispose of trust assets in the same manner you would if there wasn't a trust.  The trust agreement just kicks in when either you or your spouse pass away.

So, I recommend a full estate plan - because even though there may not be a lot in the trust to begin with, it is established and as your wealth/portfolio grows all you need to do is title additional assets in the name of the trust.

Hopefully this answers some of the questions and clarifies the will vs. trust question.


DISCLAIMER:
This website should only be used for informational purposes. It does not constitute legal advice, and it does not create an attorney-client relationship with anyone. If you need legal advice, please consult an attorney in your community.