Will vs Trust

[kyounge1956]

Up until now, I haven't done any estate planning at all. My employer offers a limited amount of free assistance with writing a will and other estate planning documents like a living will. If I want to take advantage of this benefit, I need to do it before I retire (aiming at mid-2013), so I've gone to a couple of recent informational presentations, one of which was mostly about wills and the other mostly about using a trust to avoid probate.

So, do you have a will or a trust, and why did you choose the one you chose? What are the pros and cons of each?

 

[TN_INVEST]

Definitely get a will. Even if you decide to get a trust, it is wise to still write a will.

I've always looked at the trust issue sorta the way I look at back country camping. Will a set of cast iron pots n pans fry up a nice egg for breakfast? You betcha, but I'm not sure I want to lug those things around. Will a trust help avoid probate? You betcha, but I'm not sure it's worth the money or effort.

Another thing...my largest assets are held jointly with my spouse and/or have beneficiaries (IRAs, 401ks, etc) and I feel the "avoiding probate" stuff is a bit overblown. Therefore, I do NOT have a living trust (I do have a contingent, testamentary trust clause written in my will, but I don't really expect the trust to ever be used).

 

[panacea]

We have a trust, which was unnecessary in hindsight. We don't have any complex family issues or own a business, and likely won't have a $10 million estate that would necessarily warrant the trust but at the time we thought it was a good idea. At the most basic level, the trust makes the estate process easier and more private by avoiding probate. If I could go back, a will would have been just fine. Remember that most assets generally pass outside of probate anyway if you have your beneficiary designations accurately completed on all accounts (bank, investments, life insurance, etc.). Real estate is typically the one thing (for most people) that would end up taking some time. Possibly the most important thing you can do is to prepare a health care power of attorney (in case you can't make medical decisions for yourself). Whatever you do, there's no rush... just have it done before you die...

 

[donheff]

We have a will and a trust. The trust may be overkill for us like CFPMatt, but then who knows where the estate tax will go. Our trust wouldn't avoid it but would assure that the total doesn't get concentrated in a single survivor's pot.

 

[grumpy]

Definitely get a will. Even if you decide to get a trust, it is wise to still write a will.

I've always looked at the trust issue sorta the way I look at back country camping. Will a set of cast iron pots n pans fry up a nice egg for breakfast? You betcha, but I'm not sure I want to lug those things around. Will a trust help avoid probate? You betcha, but I'm not sure it's worth the money or effort.

Another thing...my largest assets are held jointly with

"Whether its worth the money or the effort" - I can tell you from experience both ways that, for your executor, it is worth the effort.

When my mom and dad both passed away, I was the successor trustee on their revocable living trust. All of their property was titled in the trust. It only took me six weeks, with no attorney and no accountant to settle all of their affairs, distribute the funds in accordance with the trust and submit the estate's tax returns.

When DW's father died, naming her as executor in his will, the actual tasks fell to me. In addition to the 6 figure amount we had to pay to attorney and accountant, the process took nearly a year, required a visit to the out of state courthouse to file papers, required massive amounts of paperwork to each broker and fund company, bank, etc.

I turn 65 in Feb. and I do not intend to subject my children to the onerous task of probating our wills. We will be seeing an attorney soon to have a trust drawn up. I believe that it is well worth the effort.

 

[chinaco]

I would find a competent and knowledgeable estate attorney.

The word trust is a bit ambiguous... there are several types of trusts... The choice will depend on what one hopes to accomplish.

Plus... even if one employs a trust, I think they would probably need a will anyway.


I would get a Will in place and then figure out what type of trust (if any) might be necessary or appropriate. Depending on one's situation and goals... a trust may not be of much real value (IMO). Working through the issues and your state's laws is where a competent estate attorney can help.

Ultimately, the attorney will only be of limited help... you will still need to educate yourself on the issues of the different trusts and specifically the one you might employ.

There are a number of books on the topic. You can probably check one out from your public library.

But I would get the will in place ASAP. I would also get the POA for health and Finance setup along with living wills.

 

[kyounge1956]

"Whether its worth the money or the effort" - I can tell you from experience both ways that, for your executor, it is worth the effort.(snip)
I turn 65 in Feb. and I do not intend to subject my children to the onerous task of probating our wills. We will be seeing an attorney soon to have a trust drawn up. I believe that it is well worth the effort.

That is a relevant point for me because many if not all of my heirs will likely be out of state. Of course if I did use a will rather than a trust, I could always name a local executor instead of a relative, but I have no idea who would be suitable, and I'm planning to move after I retire. Everyone there will be new to me so I'll have even less idea than I do now.

 

[kyounge1956]

Definitely get a will. Even if you decide to get a trust, it is wise to still write a will. (snip)

We have a will and a trust.(snip) .

(snip)Plus... even if one employs a trust, I think they would probably need a will anyway. (snip)

The guy who gave the presentation on trusts also advocated having both.

 

[kyounge1956]

I would find a competent and knowledgeable estate attorney.

aaargh! how am I supposed to tell whether the attorney is competent and knowledgeable when I'm neither? Is this like picking a financial advisor—by the time you know enough to pick a good one, you don't need to any more?

The word trust is a bit ambiguous... there are several types of trusts... The choice will depend on what one hopes to accomplish. (snip)

The presentation was specifically about Revocable trusts.

I would get a Will in place and then figure out what type of trust (if any) might be necessary or appropriate. Depending on one's situation and goals... a trust may not be of much real value (IMO). Working through the issues and your state's laws is where a competent estate attorney can help.

This sounds like a reasonable plan.

Ultimately, the attorney will only be of limited help... you will still need to educate yourself on the issues of the different trusts and specifically the one you might employ.

There are a number of books on the topic. You can probably check one out from your public library.

Can you suggest a specific title or two that you found helpful?

But I would get the will in place ASAP. I would also get the POA for health and Finance setup along with living wills.

I think I can also do those, free or at reduced cost, via the Employee Assistance Program .

 

[MasterBlaster]

Some fine points to consider.

Probate is a court supervised equitable distribution of assets. It does cost more than a (living) trust, but for almost all estates not that much more. Everything is (supposedly) in plain view and on the table for anyone to examine.

A trust is distributed in private, should one or more of the executors be ethically challenged, then less than equitable distributions may occur. There are no estate police to watch transactions.

 

[SunsetSail]

aaargh! how am I supposed to tell whether the attorney is competent and knowledgeable when I'm neither? Is this like picking a financial advisor—by the time you know enough to pick a good one, you don't need to any more?

The presentation was specifically about Revocable trusts.

This sounds like a reasonable plan.

Can you suggest a specific title or two that you found helpful?

I think I can also do those, free or at reduced cost, via the Employee Assistance Program .

Find some attorneys that specialize in estate planning in your area. Go to your state's bar associate website and look them up. Basic trusts are pretty simple so as long as they have been practicing for a while, went to a decent school and don't have complaints you should be fine.

You can go here for some basics. Many bar associations publish some type of document that provides basic guidance as well.

If you are planning to move, I would just write a holographic will (written in your own hand) and wait until I move because the laws vary by state.

Assuming no changes in the tax laws, the largest benefits of a trust for me are preservation of the spousal exemption and the ability to limit distribution of assets to heir until they reach a certain age - I don't care how well I raise my kids I don't really want them to end up with a few million $ at 21 with full access.

 

[kaneohe]

Can you suggest a specific title or two that you found helpful?

.

I don't remember whether I've read these specific books but every book
I've seen in the Idiot and Dummies series has been quite good. You can find them in the library. Also look at the Nolo Press books.

Google

 

[Texas Proud]

I am sure some of the lawyers will chime in on this...

But, it matters what state you live in... in Texas it is not a horrible process to probate... heck, I think for a small estate you don't even have to have a lawyer... when my BIL died, he did not have a will, but my sister did everything... without lawyer... her only big deal was getting the title to the house changed and that was not that hard...

Also, as someone pointed out, if you have beneficiaries listed on all your accounts they would not go into probate anyhow...

A trust requires that you keep it separate from your own stuff... and also file a separate tax return... not the worst thing to do, but it is not without work....

 

[kaneohe]

A trust requires that you keep it separate from your own stuff... and also file a separate tax return... not the worst thing to do, but it is not without work....

A revocable living trust does not require a separate tax return....at least for individuals/couples as far as I know.

 

[JakeBrake]

A revocable living trust does not require a separate tax return....at least for individuals/couples as far as I know.

This is correct.

DW and I have a revocable living trust because we own real estate in multiple jurisdictions and we think this is the most painless way to transfer the real estate to our heirs after we both die.

The estate lawyer who prepared our revocable trust included "pour over" wills, advance directives, and durable power of attorney for both of us as part of the deal. He also handled transferring the real estate to the trust in each jurisdiction.

 

[BOBOT]

What Grumpy said.

When my mother died her will was probated by a lawyer "friend" who made damn sure he charged the max allowed by Va. law, 7% of the estate gross IIRC, after all of the expenses.

I think we paid about 2k for our trust plan (which included the wills, living wills, POA's, etc.). A damned sight less than what 7% of our estate is likely to be (unless our spend-down is timed perfectly).

 

[meierlde]

I am sure some of the lawyers will chime in on this...

But, it matters what state you live in... in Texas it is not a horrible process to probate... heck, I think for a small estate you don't even have to have a lawyer... when my BIL died, he did not have a will, but my sister did everything... without lawyer... her only big deal was getting the title to the house changed and that was not that hard...

Also, as someone pointed out, if you have beneficiaries listed on all your accounts they would not go into probate anyhow...

A trust requires that you keep it separate from your own stuff... and also file a separate tax return... not the worst thing to do, but it is not without work....

Agreed Texas has a very streamlined system, you get appointed executor and file an accounting and that is that. (Assuming no contests). Note that with will you can set up trusts with the proceeds and have them limit distributing assets until some age is reached.
The trusts generally discussed are the revokable ones. One of the issues with an estate (and the revokable trust after it becomes non-revokable) is of course filing the 1041s (turbo tax business does these quite well).
But otherwise you have to get an accountant/attorney involved in these.

 

[FreeAtLast]

A trust can be a benefit prior to death should you need others to make financial decisions for you and manage your affairs. My mother had a trust and when she went to an ALF and could no longer make financial decisions my sister and myself were able to manage her financial activities. Without the trust, the other option would have been a guardianship which is under supervision of the court system.
That would mean court orders for any changes to a monthly draw, an annual report to the court with filing fees and probably attorney fees each year for the filing.

 

[freebird5825]

This is correct.

DW and I have a revocable living trust because we own real estate in multiple jurisdictions and we think this is the most painless way to transfer the real estate to our heirs after we both die.

The estate lawyer who prepared our revocable trust included "pour over" wills, advance directives, and durable power of attorney for both of us as part of the deal. He also handled transferring the real estate to the trust in each jurisdiction.

No heirs, no spouse, but plenty of unscrupulous relatives.

I had a Revocable Living Trust, "Pour Over" Will, Instructions for Incapacity (physical and mental) situations, wishes for Funeral Services, Health Care Proxy, and durable PoA, drawn up for myself. I am the Trustee, my attorney is the Successor Trustee with a very close friend named as Trust Protector.
All of my assets (house, investment accounts, cash accounts) have either been transferred into the Trust and/or have been set up with my Trust as the 100% beneficiary.
If I ever re-marry, this type of setup is almost as good as a pre-nup, as it has firmly established my separate assets versus any perceived jointly held assets after the fact. Widows have to think about things like that.
A nice little bonus is I also don't ever have to be concerned about any heirs of any future husband or my own relatives making claims against my estate. My Trust is a very tightly closed door in that respect.

YMMV

 

[GregLee]

No trust, no will, no probate for me. I've been through two of these transitions, when my father was invalided and died (what he had went to my mother), and when my mother was invalided and died (what she had went to me). When I die, what I have will go to my wife. In all cases, all property and investments have been jointly held, and any wills were not probated and, hence, turned out to be unnecessary. When my father needed to have medical expenses paid, my mother simply wrote checks on their joint bank account, and likewise I simply wrote checks for my mother's expenses. Perhaps something more formal would have been necessary if large amounts of money had been involved and various people had been contending for control of the estates, but in my family this has not been the case.

 

[meierlde]

A trust can be a benefit prior to death should you need others to make financial decisions for you and manage your affairs. My mother had a trust and when she went to an ALF and could no longer make financial decisions my sister and myself were able to manage her financial activities. Without the trust, the other option would have been a guardianship which is under supervision of the court system.
That would mean court orders for any changes to a monthly draw, an annual report to the court with filing fees and probably attorney fees each year for the filing.

Note that a durable power of attorney can accomplish the same tasks in the event of incapacity.

 

[kaneohe]

Note that a durable power of attorney can accomplish the same tasks in the event of incapacity.

My experience is that often (usually/nearly always), the power of attorney
is not accepted by financial institutions who seem to want the POA on their own specific forms. If they accept the POA, they only seem to do it if the
person granting the POA fills out another form (forget the exact name of that form.......) which of course they would not be able to do if disabled.
I do not know if the trust experience would be any different.

 

[kyounge1956]

I went to the library after w@rk and borrowed Nolo's Guide to Basic Estate Planning and a book specific to my state, and put What if my Pet Outlives Me? on hold.

 

[grumpy]

No trust, no will, no probate for me. I've been through two of these transitions, when my father was invalided and died (what he had went to my mother), and when my mother was invalided and died (what she had went to me). When I die, what I have will go to my wife. In all cases, all property and investments have been jointly held, and any wills were not probated and, hence, turned out to be unnecessary. When my father needed to have medical expenses paid, my mother simply wrote checks on their joint bank account, and likewise I simply wrote checks for my mother's expenses. Perhaps something more formal would have been necessary if large amounts of money had been involved and various people had been contending for control of the estates, but in my family this has not been the case.

And if (God forbid) she dies before you where do your assets go?

 

[GregLee]

And if (God forbid) she dies before you where do your assets go?

I don't have a precise plan for that. It's hard to get interested. I may be able to spend everything, since it's not that much.