About 20 years ago, I used to get a lot of people who insisted on using a Living Trust as their estate plan. They had gone to a seminar or bought a book, most often produced by a regional “Law Firm” that sold Living Trusts and charged at times exorbitant rates. I’d have to talk these clients into the advantages and disadvantages of setting up living trusts. For some clients, it was an appropriate way to set up their estate plan, but for others, it was a waste of time and money.
A number of variables affect the decision whether to conduct your estate planning through a will or through a living trust. No single factor ever decides the question. Selecting the process that works best for you requires a review of your entire situation. Including assets, heirs, beneficiaries, and any special problems or needs, or desires. That review is best done by an experienced estate attorney. Yes, attorneys are expensive, but consider the value of your estate and the cost if something goes wrong, including not only the costs in unnecessary taxes, attorney fees, and probate costs, but the cost on the family as well.
What type of estate plan do you need? The chart below will allow you to compare wills and revocable living trusts as primary estate planning tools. Take a look. Then, if you’d like to discuss the best vehicle for you, call us for a consultation and let’s get started.
|Factors Tending to Favor Will over Living Trust||Will||Living Trust|
|Ease of implementation||Usually very easy||More difficult, requiring Complete asset inventory And retitling of assets|
|Cost to prepare and implement||Approx $500-$1,400||Approx. $2,000 – $4,000, including retitling assets|
|Ease of maintenance||Periodic review, every few years||Constant attention to maintaining title of assets in name of trust|
|Opportunity for fraud on beneficiaries||Court and attorney supervision reduces chance of fraud by personal representative||Lack of court supervision enhances opportunity for fraud by successor trustee|
|Age of client||Appropriate for any age (must be 18)||Usually inappropriate for younger clients because of higher initial cost, long-delayed savings, and need for lifelong attention to funding details.|
|Necessity of court-Supervised probate||Court-supervised probate process after death. Usually necessary upon death of second spouse, but often not necessary upon first spouse’s death||Usually unnecessary, unless cause of death is someone else’s negligence or not all assets are in the trust|
|Delay in distribution of financial assets||7-12 month sin most situations (except life insurance), can be much longer, but advance distributions can be made, if needed||Nearly immediate distribution of most assets in most situations, but final distribution will often be delayed for several months|
|Disability of dependent||Can include trust for disabled dependent, but does not operate until client’s death||Can include provisions for disabled dependent that operates during client’s lifetime|
|Real estate in more than one state||Probate costs in each state where real estate located||Probate not necessary to transfer title to real estate|
|Challenges to estate plan by disgruntled family||Mandatory notice to heirs increases likelihood of challenge. But can include “attornment” clause disinheriting heirs who may challenge the terms of the will||Lack of requirement to notify heirs, need to heir to file independent court action may reduce chance of suit. However, keeping plan secret form heirs may have opposite result, as litigation is only way to force disclosure of estate plan|
|Professional fees following death||Probate often means higher legal fees; accounting fees comparable to trust||Usually lower legal fees; Accounting fees comparable to will|
|Privacy||Not private- court files open to public inspection||Private- no court file open to public inspection|