We are often asked which is the better estate planning tool - a will or trust. While our answer to that question may depend on your circumstances, here are just a few reasons why we recommend living trusts to our estate planning clients:
1. Avoid Probate:
Putting your assets in a revocable living trust relieves your grieving family of the burden that is the probate process. In addition to being time-consuming, probate can be expensive with costs of administration, advertising, appraisals and attorney fees. You can save your family from much stress during a difficult time by creating a living trust.
2. Easy Modification:
Changing a will requires the creation of a codicil, which is just a fancy word for amendment. The execution of a codicil, however, requires rigid obedience to the same formalities that were required when executing the will itself. And this must be done each time the will is amended.
Amending a trust requires fewer formalities.You amend a trust by a writing, called an amendment to the trust, which explains the changes, specifies the new additions or deletions, and is signed and dated by you.
Revocable living trusts provide privacy in ways that wills and probate cannot. At death, there is no reason for the trustee of a trust to run an ad in the newspaper to announce the death of the trust maker (unless the trustee is trying to cut off creditor or tort claims). In addition, the trust document is not entered into any public domain and therefore, the beneficiaries' disposition is never made public.
4. Avoid Estate Challenges:
Revocable living trusts usually eliminate challenges to the estate. Wills can be challenged for a number of reasons, such as undue influence or duress, as well as a claim that the person making the will did not follow the statutory requirements. Though trusts can be challenged, the chances of breaking a trust are low. To further discourage a trust challenge, the trust document can actually include language that specifically disinherits a potential heir who raises a challenge.
5. Avoid Conservatorship:
Management of the assets is continuous throughout the trust maker's life and can continue through multiple generations. The trust maker can serve as the initial trustee, managing all of the trust's assets during his or her life while able. When the initial trustee can no longer manage the assets, there is no need for the appointment of a conservator (someone who manages another's financial affairs) by the courts. The revocable living trust management will move smoothly to the successor trustee without a break in asset management.
6. Protect Children:
The trust maker can design his or her trust to protect minor children. Assets can be managed to provide income for health, maintenance, education and supporting. A trust can be written to protect the assets until the minor child reaches some level of financial maturity.
7. Quick Distribution:
The most common advantage of a revocable living trust (at least for the beneficiaries) is that a trust can hasten the distribution of assets to the beneficiaries. While the probate process is filled with statutory delays, the revocable living trust trustee can distribute assets as quickly as the trustee can gather together the assets and pass them out to the beneficiaries.
8. Protect Against Creditors:
Trusts can be drafted to protect future generations from creditor claims, lawsuit and even claims arising from divorce. An attorney can include a spendthrift clause in a revocable living trust, which provides that the funds are for the beneficiaries and will not be available to pay claims made against the beneficiary. The spendthrift clause will, if properly drafted, even protect against the trust assets if the beneficiary files bankruptcy.
These are just a few of the many advantages to revocable living trusts. For more information on trusts and other estate planning needs, contact our office to schedule a free consultation.