Monday, March 31, 2014

Trust Based Estate Plans vs. Will Based Plans

Many people now choose a revocable living trust instead of relying on a will or joint ownership in their estate planning. A living trust that has been properly prepared and funded with your assets can provide many benefits for you and your loved ones.

How many of these benefits of a revocable living trust are you familiar with?
  • Avoids the time and expense of probate when you die.
  • Avoids multiple probates if you own assets in more than one state.
  • Provides easier, more efficient administration of your estate.
  • Prevents court interference at incapacity.
  • Gives you and your family maximum privacy by avoiding public court processes.
  • Minimizes emotional stress on your family.
  • Brings all of your assets into one plan controlled by one set of instructions.
  • Prevents unintentional disinheriting.
  • Makes it easier to make equitable (fair) distributions to your beneficiaries.
  • Lets you keep assets in the trust until your beneficiaries reach the age(s) you want them to inherit.
  • Can continue longer to provide for a loved one with special needs.
  • Assets can remain in the trust and be protected from beneficiaries’ creditors, spouses, divorce proceedings, irresponsible spending and future death taxes.
  • Prevents the court from controlling inheritance of minor children.
  • More difficult than a will to contest.
  • Provides effective pre-nuptial protection.
  • Can be changed or cancelled at any time.
  • Allows for professional asset management with a professional trustee.
  • Can include tax planning to reduce or eliminate state and/or federal estate taxes.
  • Lets you keep maximum control while you are living (even if incapacitated) and after you die.
  • Peace of mind.

It will probably cost more initially to set up a well-drafted living trust than to have a will prepared. One reason is that a living trust usually has more provisions because it deals with issues while you are living as well as after you die, and a will only deals with issues after you die. When comparing costs, remember that the true cost of a will must include the costs of probate when you die, of a possible conservatorship if you become incapacitated and the costs of a guardianship if you leave assets to minor children.

After weighing the costs and benefits, it is easy to see why so many people and professionals prefer a living trust.