A will takes effect on your death and describes how to distribute your estate to your family, friends, or charities.

In your will, you will nominate a personal representative (executor) to wrap up your financial affairs. This person will distribute assets to your beneficiaries, close bank accounts, transfer real estate titles, and pay any debts. If you have minor children, you will also nominate a guardian to take care of them if both parents pass away. Most people also establish a testamentary trust to hold and manage funds until young beneficiaries are a suitable age.

Generally speaking, Washington imposes a tax on estate assets exceeding just over two million dollars. You can minimize your estate tax exposure by including some basic provisions in your will. Making gifts to charities or non-profits will also reduce your taxable estate while providing an immediate benefit to organizations your support. We can help you analyze the benefits of charitable giving and help you navigate the available alternatives.

Your will does not need to be complicated, but even the simplest will must be formally and properly signed and witnessed to be valid. You can change your will at any time, but you must follow the same formal procedures for the changes to be effective.

Sometimes, a revocable living trust is an effective substitute for a will.

When you use a revocable living trust instead of a will, you transfer all your assets into the trust during your life. Initially, you serve as your own trustee. You nominate a successor trustee to take over the trust administration when you can no longer serve. When you die, the successor trustee must follow your instructions in the trust and distribute the assets according to its terms. No probate is necessary.

Setting up and maintaining a revocable living trust involves a significant expense and complexity. Contrary to popular belief, “avoiding probate” is not necessary or even particularly desirable in Washington. Likewise, transferring your assets into a revocable living trust does not avoid income or estate taxes. There are a handful of reasons why a revocable living trust might make sense for you—for example, if you own out-of-state property or have significant privacy concerns—but for most of our clients, the effort and expense of maintaining a revocable living trust far outweighs its benefits. Furthermore, even if you have a revocable living trust, you still need a will to handle any assets that are not transferred to the living trust.

For married couples, a community property agreement might be the best way to transfer assets upon death. Other estate planning tools include holding assets jointly with a right of survivorship, recording a Transfer on Death Deed, or designating beneficiaries to receive bank or brokerage account proceeds upon your death.

All of these approaches have benefits and risks, and we can help you determine which combination will achieve your goals most effectively.

Proper planning will also maximize the amount of your estate that transfers without triggering Washington’s substantial estate tax.

Contact us to learn more and determine which approach is right for you.