Living Trust Vs Will - Which is Right For You
Posted by admin on Feb 7, 2010
Living Trust vs Will is an estate planning question I hear daily in my law practice. These are the two main forms used to accomplish estate planning. Most people have heard of the Will, but in our law practice the Revocable Living Trust is the document of choice. Both get the job of transferring your property done at death but do it in different ways. The main difference is whether your estate will go to court or remain private.
A Will is a formal legal document that tells the Probate Court who gets your probate eligible property. Probate eligible property is owned by a person at their death with no beneficiary designation or co-owner. Having a Will does not avoid probate.
The primary objective of the Living Trust vs Will is to avoid probate and keep you, your family and property out of court. The Living Trust is a separate entity that is created to own and manage property. The creator of the trust, the Grantor, is typically also the trustee, person in control, and the primary beneficiary, in most cases with the spouse and any minor children. The main differences lie in the before and after death administration.
You do very little before death with a Will. Generally you sign it and put it in a safe place. You may also make some beneficiary changes on life insurance and or retirement plans but that is about it. After death is where the work starts. The family will meet with an attorney who will then initiate the probate court proceeding. This court procedure will last approximately eight to fourteen months. There is also a cost associated with the probate. Attorneys can either charge a percentage of your estate usually ranging between 2% - 4% or by the hour with total costs ranging from $4,000 - $10,000 or more.
To contrast a Living Trust, before death is where the work is. After the Grantor signs the trust, he or she must fund it. All probate eligible property must be transferred and titled to the trust. Primary or contingent beneficiaries must also point to the trust. Once this funding is complete, probate will be avoided upon death because the decedent does not own any probate eligible property, it is owned by the trust which continues on. This makes the post death administration much quicker because there is no property transfer required. The successor trustee continues to manage the property for the next set of beneficiaries.
Another great feature of the Living Trust is financial assistance during your life if you become incapacitated. In this case, your successor trustee begins to manage your property for your benefit and can pay your bills. Another court procedure is avoided as no adult guardianship is needed. The Will does nothing for you during your life.
When deciding between the Living Trust vs Will, the living trust is a better choice for most but many people cannot afford the up front costs in attorney fees which range from $2,000 - $5,000. Until recently this initial attorney cost has been a barrier for many but now with the information available on the internet, more and more people are creating living trusts themselves.
By: Robert Olson
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