Do residents need a will? It's Jon from Financial MD, welcome to today’s Didactic Minute. That’s a great question. We get it a lot with our clients, at our resident workshops that we do – all over the place – and understanding it’s a greater concept that encompasses estate planning.
What is estate planning? It’s a lot of things. It’s a will, it’s a trust, it’s neither of those things. The general default for estate planning, depending on the State that you’re in, is your stuff goes to probate court and they decide what happens. Now the only things that stay out of probate without a will and a trust are things that have a beneficiary on them – 401(k)s, IRAs, life insurance. There are lots of things that can have beneficiaries and they should, so that’s a good thing to do. Check your beneficiaries every few years just to make sure they’re still what you want them to be. Now if you don’t want probate court to decide what happens to the rest of your stuff, which is costly and often what nobody wants, then you write up a will. And you can do that yourself. You can have an attorney do that. You can go to LegalZoom – you write it, you sign it – that’s a much simpler way to make sure your stuff goes where you want and how you want.
A trust is essentially a container, a much more complex entity where you do want an attorney to help you draft that. That, basically, when you die puts your stuff into a separate entity with its own Social Security number, you establish a trustee, you put beneficiaries on it, and you get to decide when, how – all the manner of how things get distributed or if they never do and they stay in there forever. They go to a charity or all sorts of different things. So, maybe you’ve got kids – a trust can be a good idea if you have kids – and you want them to get some when they’re 18, some when they’re 25, some when they’re 30. Some only if they have their shit together and they’re doing well in school or any of those things – a trust is probably a good situation for that.
So, have you done estate planning? If you haven’t, look into it because if you haven’t, you have done estate planning which is no plan and stuff is going to go to probate which you probably don’t want that.
Good to see you guys. We’ll see you next week.