Do I Need a Will or Trust?

I read a couple of articles this week that have prompted me to write a little about wills vs. trusts.  The late Aretha Franklin died last week without a will or trust.  Her attorney was quoted in an article as saying: "I was after her for a number of years to do a trust . . . . It would have expedited things and kept them out of probate and kept things private."  He went on to say: "I just hope (Franklin's estate) doesn't end up getting so hotly contested . . . . Any time they don't leave a trust or will, there always ends up being a fight."  In another column, Washington Post Personal Finance Columnist, Michelle Singletary, wrote: “Do you love your family? Because, if you love and care about them and want to minimize the drama that you may leave after you die, you would get a will. And I don’t mean something done on the computer that you sign and stuff in a folder.”  Starting with the premise that you need a will or a trust, which one is right for you?What is a Will?A will is death instrument, meaning it is only effective upon your death.  Further, it must be probated to be effective.  This means it must be filed with the court and an order must be obtained appointing your personal representative to act on behalf of the estate.  Many states place a limit on how much time you have to file a will for probate after death.  Failure to timely file the probate will nullify the will.  A will provides for the orderly distribution of assets upon your death through the court process.  The process is managed by your court appointed personal representative who you nominate in the will.  You can also nominate individuals to protect minor or disabled children as their guardians and conservators.Some of the advantages of a will include:

  • Simplicity of preparation means it is often less expensive

  • Supervision by a court

  • Full disclosure of provisions contained in the will to all parties

What is a Trust?A trust is simply an agreement that provides for the management of property at different stages of life and following your death.  A trust does not require probate to be effective.  The trust directs the trustee how to use money and property, but also why you made these choices – expressing your beliefs, values, and choices.  Trusts can own:

  • Homes and recreational property

  • Farms and ranches

  • Personal property - cars, boats, and airplanes

  • Bank accounts

  • Stocks and bonds

While a properly designed trust can be the beneficiary of a retirement account, it cannot own your retirement account while you are alive.Some of the advantages of a trust include:

  • It can be effective during life and after death

  • Avoiding the cost and time of court involvement – no probate

  • Ease of administration

  • More flexible in how you treat beneficiaries, including minor or disabled beneficiaries

  • Better tax planning options

  • Protects privacy

Whether it is a will or a trust that is right for you will depend on your unique circumstances.  One size fits all documents should be avoided in either case. Without question, making the investment in a quality estate plan that meets your goals and objectives is vital for every individual.  We are quickly nearing the end of 2018.  If you are one of the many who is still without an individualized estate plan, make it your goal to have one in place before the end of the year.  Your family will thank you.