The majority of Americans understand the reasons why they need a will.
After all, most adults are very familiar with wills, but less people understand
living trusts. Often, estate planning attorneys hear people say, “If
I have a will, why would I need a living trust?”
You may assume that you need and want a will, but a will may not be sufficient
for you and your family. For starters, wills do not avoid probate when
the decedent passes away. All wills must be authenticated (validated)
in probate court before they can be effective.
Unlike revocable living trusts, wills only become enforceable
after you die. This means that a will won’t provide you with any protection
if you are seriously injured in an accident, or if you otherwise become
physically or mentally incapable of making financial decisions for yourself.
If you were to become incapacitated, the court can step in and take control
of your assets while you’re still living.
Why would I want to avoid probate?
Probate is a court-supervised legal process where a personal representative
(executor) is named to pay off your debts and taxes and distribute your
remaining assets to your heirs, all according to the directions in your will.
If you die without a will (intestate), your assets will be distributed
according to your state’s intestate succession laws. In this situation,
generally a decedent’s assets are distributed to their closest living
relatives, such as their spouse, children, and parents (if living) etc.
Why would I want to avoid probate?
- When assets are tied up in probate, it can up to two years (sometimes longer)
for them to be distributed to heirs.
- Since probate cases are public, any “interested party” could
find out what the decedent owed, who they owed it to, who will receive
the decedent’s assets, and when. The probate process invites disgruntled
heirs to contest a decedent’s will.
- The decedent’s family does not control the probate process, the court
does. The probate court in your local area determines how much it costs,
how long it takes, and what information is available for the public to view.
What is a living trust?
Like a will, a living trust is a legal document that contains your specific
instructions about what you want to happen to your assets after you pass
away. Some of the major differences between a will and a trust are that
a trust can avoid probate, it allows you to control your assets while
you’re alive, it allows for a quicker distribution of assets to
your heirs, and it prevents the court from taking over and controlling
your assets if you become incapable of handling your estate.
You Maintain Control of Trust Assets
When you establish a living trust, you transfer your assets from
your name to your trust, which you, the trustee, controls until your death. As the
trustee of the trust, you maintain full control unless you become incapacitated
or you die.
If you become incapacitated, the successor trustee that you named takes
over and manages the trust on your behalf. When you pass away, your successor
trustee settles your estate
without interference from the court.
Unlike a will, your trust won’t necessarily die when you do. You
can set up a trust where the trustee manages your assets until certain
things happen, such as your beneficiaries reach a certain age, get married,
or have children.
Should I have an attorney set up a living trust for me? Yes, but you don’t
want a general practice attorney to do it – you want an estate planning
and probate lawyer with considerable experience with living trusts to
ensure the trust is prepared and funded correctly.
Is a revocable living trust right for you? To find out, speak with an estate
planning attorney for the advice and professional guidance you need!