One of the most common questions I, as an estate planning attorney, am asked is whether a will or a trust should be used to plan an estate. Wills are the most well known and have traditionally been used to transfer assets at time of death, but over the past 20 years there has been a significant movement toward utilizing revocable living trusts. Since a will lies dormant until a death occurs, it cannot be utilized for disability planning. Moreover, wills require a court supervised procedure called probate to transfer assets when death does occur. While probate can be a very beneficial process, clients generally associate high costs, delay, and loss of control with probate, and seek to avoid probate when possible.
If properly established and funded, a trust can avoid probate at time of death. Funding is simply the process of retitling assets into the name of the trust rather than holding them in your personal name. Since a living trust typically names the Trustmaker as the Trustee and the Beneficiary, control and utilization of all property is maintained. When a death occurs, the trust is already the owner of the property, and supervision through a probate court is not required.
A trust also has an added benefit. Unlike a will, a living trust springs to life upon signing, making detailed planning for a potential disability possible. The Trustmaker can identify who will be in charge in the event of incapacity, as well as identify how assets are to be used to care for the Trustmaker and other loved ones. It is even possible to leave instructions for the successor Trustee as to how the assets are to be rearranged if a long-term disability occurs so as to reduce or eliminate the cost of nursing home care.
The creation and settlement of wills and trusts can be very complicated, and it is recommended that you meet with your attorney to determine which planning process if right for you.
Wayne W. Wilson