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Writer's pictureChain Breaker Law Firm

Should I Make a Trust or a Will?

Updated: Aug 31, 2021

Here are Our Top Seven Reasons You Should Establish a Trust and Make a Will Today:

 

The unintended consequences of your hard work might end up being a legal fist fight between your heirs over your estate, resulting in a barrage of lawsuits and legal posturing that may tie up much needed finances and your desired charitable endeavors for years. The late Singer James Brown and his heirs was no exception to this very time consuming and emotional circumstance.


Brown died on Christmas Day in 2006, but his Estate was not finalized until July 9, 2021, after the heirs agreed to settle. During the fifteen years of battle it was revealed that Brown's wife would get nothing from his Estate since she was still legally married to someone else when she wed Brown in 2001. Since then, the singer’s many heirs — children, grandchildren and an ex-wife lives have been held in limbo due to litigation of Brown's 2000 will. This unfortunately, is a recurring problem and can be overcome by proper planning with an Estate attorney.


When most people think about putting their legal affairs in order, they have very important decisions to make. One of the most consequential issues is deciding which legal instrument(s) you will use to convey your assets to your heirs. You can use a Will or a Living Trust, also known as an “inter vivos” trust. However, there are some important differences, advantages, and disadvantages of each, so it is vital that you have all the information you need to make an informed decision. Here are important questions to ask your estate attorney about:



1. Can Probate Issues be Avoided?


One of the biggest advantages of a Living Trust is the capacity to convey property to your heirs without subjecting them to the probate process, which can be expensive and time-consuming. However, you must convey your assets into the Trust during your life, which can also incur both financial and temporal costs. It is critical to ensure that all of your assets are titled correctly in the Trust. Doing so will eliminate most unforeseen probate issues pertaining to asset ownership and transferability to the heirs. Unfortunately, this step is often overlooked and can become a costly expense after the fact. Working with a knowledgeable estate attorney that is not biased one way or another will help you make a truly informed decision that is right for you and your family.


2. Are End-of-life Discussions Always Uncomfortable?


End-of-life discussions can be very uncomfortable, but it doesn't have to be that way. The key is to find the peace of mind that you need to get through the decision making process. Remember that not all property, not all of your assets, needs to be distributed through a Will. You can designate beneficiaries on insurance products and retirement accounts to give your heirs the funds they need to get through the probate process. And assets already transferred to a Living Trust are distributed in accordance with the terms of the Trust, so communicating how you want those assets to be handled should be done sooner rather than later.

Oftentimes people may feel uncomfortable or even guilty of procrastinating. Sometimes they are unsure because of their current relationship status. Don’t suffer from Estate Paralysis by Analysis! If you understand that this is not just a Trust, but a legacy that you're leaving for your heirs, you will see that this is just another component of getting all your legal affairs in order. You can set up your Trust in such a way that you can make changes as important life events occur (birth, divorce, the passing of a loved one, etc.), and you can always make a new Will that revokes your previous Will.


3. Should I Use a Living Trust? Or a Will?


There are many different kinds of trusts, but here we are focusing primarily on the Revocable Living Trust, which is a great vehicle to pass along assets to your heirs. And it is exactly what its name says it is: a Trust that is established while the creator (or “Trustor”) is still Living and is also Revocable by that Trustor. The Revocable Living Trust not only conveys your assets upon your death, but it can also protect your assets against creditors while you are alive, thus protecting your legacy in both life and death.

Many Wills have a trust set up within them, which comes into existence upon death and is called a Testamentary Trust. But you can go ahead and start preparing your assets to pass to your heirs in a Living Trust now.

Even if you establish a Living Trust, you will still need a Will for a few reasons. Probably the most common reason to have a Will when you have already created a Living Trust is to govern assets that may still be in your name when you pass away. For example some people create a Trust, convey their assets into the Trust and then they go buy another home and mistakenly buy it in their own name, rather than the name of their Trust ... they pass away and now there's a home in their name. The Will can be a backstop to get that asset transferred into the Trust. Another example: maybe someone owned a few shares of stock that they forgot about and didn't convey them into their Trust, when they passed away years later, that stock was still in their name. Unless they planned ahead, their heirs will need to go through probate to get those shares transferred into the name of the Trust. But a Pour-Over Will can address this situation. Such a Will typically says, basically, “if I own anything in my name when I die, I leave it to my trust.” While that situation still typically requires the involvement of the probate court, it is far far better than not addressing those assets at all and leaving them to be fought over (and likely dissipated) in intestacy.

4. Testamentary Trust?


A common form of Will may leave certain assets to a spouse, children, or other family members or friends. These are specific bequests. But it is important to address the “extra” assets that you don’t specifically give to someone. This is called the “residue” of the estate, and it is often left to a Testamentary Trust, which is just a trust that is established within the Will itself. The Testamentary Trust enables you to control your assets, to some extent, from “beyond the grave.” Cue the creepy music! But seriously, if you have small children and want to leave them money for their education, and then for them to get started in life once they reach a certain age, a Testamentary Trust can accomplish that goal efficiently without impairing your access to those assets while you are alive.


"The importance of putting a Trust or a Will in place for your heirs is more important now more than ever. We are living in a difficult period of time, so making sure your heirs are secured is of the utmost importance"

5. Is a Will Plan Essential?


A well-developed Will Plan enables you to leave all of your assets in your name and stipulate how you want the assets to be distributed. If you have a strong Will, then your assets might not need to be conveyed into a Living Trust. Some assets, like IRAs or retirement accounts, annuities, life insurance, bank accounts, etc., can pass directly to the designated beneficiaries without going through probate. These are called P.O.D. (“payable on death”) accounts or Totten Trusts. These assets are not frozen at death. The other assets that are being conveyed by the Will must go through the probate process. Probating a Will can be simple and easy if the Will is clear and uncontested, or it can be gut-wrenchingly difficult and disruptive if it is vague and contested. Excellent writing skills are vital to drafting effective and efficient Wills and Trusts.


6. What are the Differences?


There are several differences between a Revocable Living Trust and a Will. The Revocable Living Trust must have assets conveyed into it, which involves re-titling those assets in the name of the Trust. That can be a hassle, but it does protect those assets from creditors. Additionally, the Trust can reduce the amount of assets that must go through probate, or possibly even eliminate the need for probate altogether. With a Will, the assets remain in your name and you don’t have to convey anything... but, all that happens after you’ve passed. But a Will must be probated. So one of the big questions is simply whether you want to deal with conveying your assets into a Trust, or whether you’d rather let your heirs deal with the probate process. Either way, a Revocable Living Trust, coupled with a well-drafted Will, is the most responsible way to convey your legacy to your heirs. Don’t be like Alexander the Great, who, when he was asked on his deathbed to whom he wanted to leave his empire, replied “To the strongest! 💪” While that might make for a stirring deathbed quote, it certainly isn’t conducive to family harmony after your passing.


7. Language is Paramount in Estate Planning, or is it?


Whether in a Will or a Trust, careful and precise writing is crucial to achieving your goals. Since everyone’s situations are different, taking the time to discuss the ins and outs of your estate with your attorney is crucial to ensuring that all the legal requirements are fulfilled and the proper instruments are in place to protect both your legacy and your heirs.


If you create or update your Trust or Will, you can look after your loved ones and give them a guide to follow after you pass. This gives many them peace of mind, knowing that you have made thing relatively seamless by taking ownership of the most important decisions they would have to make when you pass.


Your situation may involve large or particularly complex estate matters, contentious family dynamics, and you feel like you need expert advice from an attorney, you can reach out to us to discuss your Estate planning needs.



by CBLF on July 21, 2021

PO Box 965062

Marietta, GA 30066

Tel: 470-309-1441


Read more of our articles or follow us on our social media sites at www.chainbreakerlaw.com




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