If you’re familiar with the I-Feel-Like-I’m Fixin’- To-Die-Rag by Country Joe McDonald, of Country Joe and the Fish fame, you’re probably the same age as I am or older.  “Whoopee! We’re all gonna die,”  is the refrain of that song made popular at Woodstock.  It was written as a Vietnam War protest song, but equally fitting as a retirement anthem.  By the way, Joe (Joseph Allen), ex-boyfriend of Janis Joplin, is still with us at age 75, as of this morning, and he is not an heir to the “Big Mac.”  He was a New Years baby from 1942 and a veteran of the Navy.  However, he was named after Joseph Stalin, before his parents renounced the Communist cause. (See posts #136 and #137:  What’s With That Name?)

It’s time to get serious for a moment, because we will all eventually die.  Hopefully, it’s at a time when we are ready and prepared, rather than sudden and unexpected.  As we’re planning this inevitable ending to our lives, we want to make sure that our assets are easily passed along to those most deserving and with the least amount of tax consequences.

My wife and I have separate wills, prepared this last time through Legal Zoom.  As a customer, I’m sure their attorneys won’t mind me sharing some information with you from their website.  We are in the process of preparing new wills, since we now live in a new state and our assets have changed.  As I was looking into this somewhat depressing topic, I thought a little Country Joe humor, or as Mary Poppins sings, “a Spoonful of sugar helps the medicine go down” would be appropriate.  After all, Country Joe and Mary Poppins have a lot in common…not!

I can only hope that anyone reading this has some form of will prepared, regardless of your age and the formality of the document.  There’s one ugly word in this process, and that is “probate.”   Probate is the court system designed to wrap-up a person’s affairs, after their debts have been settled.  Like any government-controlled procedure, probate can  be a very slow, cumbersome process.  Additionally, it can be very expensive, and for most estates isn’t apparently necessary.  I’m not an attorney, so I leave further research up to you.

The alternative to probate is a living trust, a document according to Legal Zoom experts that only about 20% of Americans prepare.   Property left in a living trust does not pass through probate, unlike a will.   A will directs who will receive your property at your death and appoints a legal representative, “executor,”  to carry out your instructions. A will only goes into effect after you die, while a living trust takes effect as soon as you create it.

A living trust (inter-vivos” or “revocable” trust) is a written legal document through which your assets are placed into a trust for your benefit during your lifetime and then transferred to designated beneficiaries at your death by your chosen representative, called a “successor trustee.”  It means faster distribution as the successor trustee pays your debts and distributes your assets.  Also, If you become ill or incapacitated, the living trust is written so that your trustee can automatically begin making decisions, as opposed to a will, that without a durable power of attorney, the court will be in control of all related decisions, including appointing an overseer.

Drafting a trust costs more than a will and takes more time.  You have to transfer your assets ,such as bank accounts, stocks, bonds, and certificates through separate paperwork.  You have to also transfer the beneficiary  of your life insurance policies, similarly deal with your IRA and/or 401k, and create a “pour-over will.”   This will- supplement is prepared to distribute any assets acquired after the creation of the living trust  or any assets inadvertently excluded .  As a will, it will necessarily have to pass through probate.

Probate costs vary, and with a simple uncontested will, costs are often nominal.  Any court costs associated with probate are deducted from the estate.  If you own out-of-state property that is distributed through a will, it will have to go through probate in its own state.  Plus, if you have minor children, you must use a will to name a guardian.  A trust can’t provide for this.

I’ll write more about the will vs. trust analysis, as I continue to do more research into inheritance tax, estate tax, and tax tax.  The bad news for our beneficiaries is that we still own money on two houses, have some credit card debt, and will be spending most all of our IRA on travel.  Hopefully, there won’t be much left except for fond memories, and our Country Joe And The Fish , and Mary Poppins albums.  Whoopee!