Wills and Trusts

Basic Essentials of Estate Planning

wills and trusts

Wills and trusts are two of the most basic tools of estate planning. In fact, a Will is the one essential tool - everyone should have one! For families in business together, each member of the family should have a Will. A valid Will can help avoid estate issues for the family and the business.


A Will, also known as a "Last Will and Testament", is a legal document that directs how a person wants their property disposed of when they die.

From such a simple concept comes much complexity! Does a Will need to be written? Does an attorney have to help prepare a Will? How detailed should a Will be? And so on.

We aren't going to go into all those details. But there are 2 points that we feel should be emphasized.

1. You should have a Will. It just doesn't make sense to "save" a few dollars and a bit of time and let the state take over and handle your affairs when you die.

2. The Will must be valid and properly executed for the jurisdiction where you live. Whether or not that means an attorney's assistance depends on many things. But if you "do it yourself" be certain you have met all the provisions of your jurisdiction. If your situation involves anything complicated and you are doing any estate planning, the Will will be a part of the overall estate plan, so it will almost certainly warrant and get proper legal review.


A Trust is a legal entity. Like a person or corporation, for example, a Trust can hold title to property. Property is transferred to the Trust by the Settlor [Grantor, Creator]. The actual title and control of the property is held by the Trustee. Ultimately, it goes to the benefit of the Beneficiary.

The Trust Agreement or Declaration of Trust is the legal document that creates and governs the operation of the trust.

When a person dies, the legal process of Probate operates. In a nutshell, probate first establishes or "proves" that there is a valid Will that directs how the deceased's property and affairs are to be settled. If there is no [valid] Will, state law provides for distribution and management. The records and proceedings of Probate are public - that is, any one can see the documents involved and thus know what assets you own and how you wanted them distributed.

A Trust does not cease or "die" when the Settlor dies. So it is not part of the Probate process, and its affairs are therefore not public. So, there are two very strong reasons why Trusts are a quite common element of estate planning...

1. Smooth continuity. On death of the Settlor, nothing changes to affect how the Trustee continues to manage the assets that were already transferred into the Trust. Court approval is not needed and title often does not even need to be changed.

2. Privacy. The Trust Agreement is not made public so neither the assets nor details of the beneficiaries become public knowledge.

In describing wills and trusts, our intent is to describe estate planning scenarios and solutions. For specific advice on estate planning, you should consult professionals such as financial planners, attorneys and accountants.

While wills and trusts are estate planning tools, the first step for family businesses should be to link the succession plan for the business to the estate plan of the family members.

It is very important for family business owners to understand that Wills and trusts do not constitute a succession plan - they are just part of the succession management process!!!

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