A will substitute is a legal device that makes it possible for a person to transfer their property to a named beneficiary (i.e., a recipient) without having to go through the state probate process. There are a variety of different legal methods that the person can choose from in order to make this happen.
Avoiding the probate process can often yield beneficial results for both the estate holder, as well as their beneficiaries. Part of the reason why bypassing the probate process is seen as an advantage is that sometimes the outcome of probate property distributions are not actually in line with the estate holder’s original intentions.
For example, the estate holder may have wanted a certain piece of property to go to Recipient A, but for some reason (e.g., invalid will, unclear will terms, etc.) after probate, that property is now being given to Recipient B.
A will substitute can be very different from a valid and enforceable legal will in many respects. For instance, when a person transfers property to a beneficiary via a will document, the asset distributions are generally made only after the death of the estate holder. This also means that the legal title to the property will not be transferred until the estate holder is deceased.
In contrast, with a will substitute, the title to the asset or property may be distributed to the beneficiary while the estate holder is still alive. Although the asset or property itself may not be transferred (i.e., the physical item), the legal title (i.e., the paperwork that shows ownership) to it will be transferred with a will substitute.
What are Some Types of Will Substitutes?
As previously mentioned, there are a variety of legal methods to use as a will substitute, and one of the primary reasons for having a will substitute is to avoid the process of probate. Some of the ways in which a person can create a will substitute include the following examples:
- Rights of Survivorship: Oftentimes, survivorship rights can help a person to gain title to the estate holder’s property. In general, survivorship is typically granted through various ownership titles, such as “joint tenancy with right of survivorship”, or “tenancy by the entirety.”
- Trusts: Several types of trusts can be created with provisions that act as a will substitute. One of the most commonly used forms of a trust for this mechanism is called a “living trust.”
- Policies and Accounts: There are specific policies and accounts that will allow a person to avoid probate, including life insurance policies and bank accounts that are payable upon death. The documents associated with these methods will usually contain a provision that states something like “transfer on death” or “payable on death.”
- Beneficiary Designations: This method typically involves some sort of contract that transfers property interests, such as retirement plans or individual retirement accounts (“IRAs”), in which there is a named beneficiary that will assume the payments upon the holder’s death.
In using any of the above methods, the will substitute operates to avoid the probate process by legally transferring the property in question during the estate holder’s lifetime. This makes it so the parties will not have to go through probate in order to have it transferred.
Also, in addition to the above list, there may be many other types of will substitutes to choose from, but this will all depend on the person’s state and local laws, and sometimes the property itself.
Finally, it should be noted that a person can have both a valid will in place before their death and they may also choose to use a will substitute for specific beneficiaries or property items that need to be dealt with separately.
What are Some of the Advantages and Disadvantages of Will Substitutes?
As with any matter, will substitutes offer an array of advantages and disadvantages. Some types of benefits that will substitutes can provide include:
- Reducing overall estate taxes (i.e., the title to the property is usually removed from the estate listing);
- Saving time, expenses, and other resources that can be lost during the probate process;
- Avoiding the possibility of receiving an unwanted outcome after the probate process ends (e.g., unequal distribution of property, property being awarded to the wrong beneficiaries, etc.); and
- It is generally easier to amend and sometimes cheaper to execute a will substitute, in comparison to a standard will.
On the other hand, there are also some disadvantages to using a will substitute. These may include:
- Will substitutes can sometimes involve extra costs (like with living trusts) due to contract or trust payments;
- There may also be certain fees attached to them, such as ones for maintenance (e.g., storing a copy, ensuring the will substitute is kept up to date, etc.); and
- If the will substitute is not set-up or executed properly with sufficient foresight, then it can result in negative tax consequences for the estate holder.
Do I Need to Hire a Lawyer for Help with a Will Substitute?
Will substitutes can be extremely helpful and in some cases, even necessary for maximizing the distribution of your estate. As is clear from the above discussion, estate matters can often involve complicated issues that may be difficult to manage without legal guidance.
Therefore, if you need advice about different will substitutes and the laws that apply in your area, then you may want to consider hiring a local will lawyer for further assistance.
An experienced estate lawyer will be able to discuss the best kind of will substitute for your particular situation. A lawyer can also help you to prepare any of the necessary legal documents.
Additionally, if you are seeking court representation on a matter involving will substitutes, your lawyer will be able to assist you with that process as well.