What are Primary Testamentary Estate Planning Documents?

The primary estate planning document holds the decedent’s instructions for the estate. While estate plans have multiple documents, only one is intended to be the primary instructions. Here’s an example—someone using a trust as their primary planning instrument would still need to have a last will and testament to address any property not funded into the trust.

A recent article from The News-Enterprise, “Make a choice about primary testamentary planning documents,” explains that other means of transferring assets are not included as primary planning instruments. The document is needed, even if all property passes through joint ownership or beneficiary accounts.

Suppose that the co-owner of a joint account or beneficiary is deceased. In that case, the primary planning instrument is needed to determine who will receive the property, in what way and who is responsible for managing the distribution of estate assets.

Primary planning documents include testamentary documents used to determine estate planning after death. Some documents, like trusts, may be effective during life and after death, but others, like power of attorney, are limited to lifetime use only.

The three general categories of testamentary planning documents are irrevocable trusts, revocable trusts and wills.

When set up correctly and barring unusual situations or family disagreements, irrevocable trusts are typically the easiest to use after death, although they can be complex to set up. Irrevocable trusts are the strictest form of planning instruments because of the strong asset protection they provide.

Depending upon provisions within the irrevocable trust, it may be possible for the grantor to change beneficiaries, or the terms of the trust may be set in stone upon execution. These same provisions will determine the tax consequences, if any, after death.

Irrevocable trusts are generally the fastest to resolve after death because of their creditor protection. The trustee does not have to wait for creditor claims and can almost immediately begin taking steps to liquidate or transfer assets to beneficiaries and file any taxes.

Revocable trusts are usually the next fastest category. However, unlike irrevocable trusts, they don’t offer creditor protection. Trustees must either open a probate case to collect creditor claims and bar future claims, or they should gather all bills and pay them before distributing the entire estate.

The third and most common primary planning instrument is a will. Unlike trusts, wills are not independent legal entities, so they do not directly own property but direct where property will go after death. They must go through probate court, and the court action usually must be open for at least six months, although this may vary by jurisdiction.

An estate planning attorney can help you more fully understand the different parts of an estate plan and determine which ones best suit your own estate planning goals.

Reference: The News-Enterprise (Oct. 7, 2023) “Make a choice about primary testamentary planning documents”