by Bryon Swanson

Estate planning is like exercise and proper diet--people know they should do it and want to take care of it, but it is always too easy to put off until tomorrow.

• Estate planning is a process you control.
• The design of the estate plan is built upon the foundation of what you want to accomplish.

We also learned that if the stigma and fearfulness are taken away, estate planning boils down to some very basic ingredients.

• Ownership of assets

• Who gets what, when and how

• Being tax-wise

This article will present a definition of ownership and how it affects the planning process.

There are three forms of ownership of importance in this process. How your assets are owned determines how they pass to those you leave behind. One of the simplest explanations of ownership comes from Esperti and Peterson's book Protect Your Estate (pp. 14 - 15):

Fee Simple

You own all of it.
You can:
Give it away.
Sell it.
Leave it on death.

Tenancy in common

You own part of it.
You can:
Give your part away.
Sell your part.
Leave your part on death.

Joint tenancy (or Joint tenancy with right of survivorship or Joint ownership)

You own all of it with someone else.

But you can:
Give your interest away.
Sell your interest.

You cannot leave your interest on death.

This ownership issue determines in part what type of plan needs to be put into place. If something is owned in fee simple or as tenancy in common, the item must pass through a will or living trust to the owner's beneficiary. If ownership is held as joint tenancy, ownership passes outside of the will or living trust to the other joint owner.

A will or living trust is a piece of paper. If properly formatted by an attorney familiar with the particular requirements of your state, then either document is recognized as your final instructions for the distribution of property. The probate process for a will or the administration process of a living trust become the two methods of following your final instructions. Either process is capable of transferring ownership to your beneficiaries.

The debate continues to rage over which process is the best--probate of a will or administration of a living trust. Both options have their own benefits and shortcomings:

Last Will and Testament

During life...

May be less costly to establish
May be updated or changed
Executor only has power after death
Is extremely powerful over any fee simple or tenancy in common assets

After death...

Must pass through probate
Court fees are assessed
Attorney receives a fee
Open to public inspection
Certain waiting periods apply
Cumbersome in handling out-of-state real property

Revocable Living Trust

During life...

Can be more costly to establish
May be updated or changed
Successor trustee can become active in managing assets
Controls only assets that are held in the name of the trust

After death...

Must be administered
Court fees may be necessary
Attorney or accountant receives a fee
Not open to public inspection
Certain waiting periods apply
Excellent in handling out-of-state real property

These lists are not meant to convince you that one document is better than another. We want you to understand the differences and to use the correct document that matches the size and complexity of your estate.

No matter which document is used, your estate will likely need to secure the services of certain professionals and assistants to carry out your final instructions. For example, it is wise to have an accountant or attorney prepare the estate tax returns--even if you are using a Revocable Living Trust.

There are a lot of details and it takes much work to finalize the business of an estate. Matthew 10:10 says that, "a workman is worth his keep." However, there is nothing gained in paying more than what is fair to both parties. Ask the hard questions now to determine which method is best for you. Look at it from a dollars and cents perspective. Don't be afraid to ask, "Which method will allow me to accomplish my desires quickly, efficiently and most economically?"