Estate Planning
Tools of Estate Planning


Chief among dispositive estate planning tools - those that direct the distribution or dispostion of property - include the Will and the Trust. Although a will takes effect only after the death of the maker a trust can be created to take effect during the maker's lifetime (an inter vivos trust) or at the maker's death (a testamentary trust).

Non-dispositive tools - those not directly affecting the disposition of property - include powers of attorney, health care proxies and advance medical directives.


A Will is an instrument that takes effect at the death of the maker. State-specific formalities exist governing how a will must be executed; failure to comply can result in the document's invalidity. In New York wills executed under the supervision of an attorney are entitled to a presumption of regulatity.

In a Will a person may stipulate how property should be distributed after death. Dispositions may be outright (e.g. - I give my cousin the sunm of five thousand dollars) or in trust (e.g. - If my only child, Erik, is under the age of eighteen years at the time of my death, I give, devise and beqeath my entire estate to my trustee, hereinafter named, in trust nevertheless for the benefit of my son, subject to the uses and purposes specificed hereinafter......). A Will may nominate individuals to act as the guardian of minor children.

Many people assume that once they have signed a Will all property will be disposed of as the Will provides. This simply is not so.

The test of whether an asset will be subject to a person's will is whether the asset has a "built-in" beneficiary provision designating a beneficiary OTHER THAN the person's estate. If this is the case, that asset will pass to the named beneficiary, regardless of what the person's Will may provide. Assets with "built-in" beneficiary provisions include life insurance policies, annuities, IRAs, 403(b) plans and 401-k plans. In addition, myriad "testamentary subsitutes" such as joint bank accounts, totten trust bank accounts or TOD designations on brokerage accounts may have the effect of by-passing the provisions of a Will.

Trust as Will Substitute

A cottage industy has arisen nurtured on the notion that court administration of settling an estate plan based on a Will (broadly called "probate") is expensive and should be avoided. The alternative offered by those promoting this point of view is the revocable living trust.

A revocable living trust is one which is created by a person during his or her lifetime, can be revoked or amended by the maker (until death) and provides for the disposition of property at death.

There are legimate pros and cons in the debate whether to base an estate plan around a Will or a revocable living trust. However, the legitimage debate is often overshadowed by the hype and hysteria fostered by those promoting the revocable living trust as the "holy grail" of estate planning. A simple fact is that the cost of a revocable living trust is often three, four or five times the cost of a Will at the time of preparation. That represents money spent now, whereas in the case of a will, expenses of administration will be paid when, and if, needed.

New York, unlike some states, requires current funding of revocable living trusts. That means that if a person wants to base an estate plan around a lrevocable living trust, he must go through the process of retitling assets in the name of the trustee or trustees of the trust. Assets not placed in the trust will not pass under the terms of the trust. So the need for a will is not entirely avoided. Moreover, some assets, such as IRAs, 403(b) plans and 401-k plans cannot be transferred to such trusts.

Copyright (c) 2008, George T. Wolf. All rights reserved.