The fact that late North Carolina basketball coach Dean Smith left $200 each to about 180 players he'd coached over the years is all over the press. The small payouts come not from Smith's will but from his revocable living trust—an estate planning tool that also merits attention (if not photo-documentation on social media).
A recent Bloomberg.com article, titled “Dean Smith's Generosity Got Lots of Press. His Estate Plan Deserves Some Too,” noted that revocable trusts are a very popular estate planning tool. They are used by many to keep the details of an individual’s estate private. Wills, by contrast, are public documents. Trusts are private—the only reason Coach Smith's gesture was known was that players made announcements of the gifts on social media.
A revocable living trust allows a person to change their mind and dissolve the trust at some point. That’s not a problem. But if you don't, whatever assets you transfer into the trust don't go through probate when you die. They’re not frozen (and are unseen by the public).
The original article emphasizes that you’ll still need a will to account for any assets that are left outside the trust, like a car. This type of will is called a "pour-over" will. It’s designed to take everything left outside the trust and pour it in.
Trusts aren't designed to be used in place of a last will and testament, but they become the main estate planning document. A revocable living trust isn't for everyone, the original article cautions. In Illinois, for instance, when a revocable living trust is used as the main document for an estate, creditors have two years to make claims—much longer than the typical six-month period allowed when a will is the primary document.
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.
Reference: Bloomberg.com (March 27, 2015) “Dean Smith's Generosity Got Lots of Press. His Estate Plan Deserves Some Too”