Do I Need a Will or a Trust?
If you don’t have a will or a trust, state law determines who will inherit your estate. Everyone should have a will. A Revocable Living Trust can avoid the need for a complicated and expensive probate and it can reduce or avoid federal estate tax. If you already have a will or trust, these documents should be reviewed every two years.
Ten Frequently Asked Questions About Living Trusts
1. What are the primary advantages of executing a revocable living trust?
A. A properly drafted living trust will minimize estate taxes and avoid probate. As creator of a self-trusteed living trust you serve as trustee during your lifetime and control all trust assets. A trust is a confidential document drafted by an attorney that passes your estate to your heirs, just like a will, but without the time and expense of probate.
2. If I have a living trust do I need a will?
A. Yes. A typical testamentary package includes a living trust, short form trust, pour-over will, power of attorney and a living will. A will is necessary to appoint a Personal Representative (Executor), a Guardian (if you have minor children) and to dispose of any assets that may be outside your trust.
3. Is a Living Trust expensive?
A. No. Probate is expensive. The cost to prepare a living trust and related documents is only a fraction of the cost of probate.
4. A Trust sounds complicated. Won’t it complicate my estate?
A. No. A living trust will not complicate your estate. It will simplify your estate. A successor trustee appointed by you can distribute your trust assets to your heirs quickly, often within a matter of weeks. A trust avoids probate which can take up to two years. Once established, a trust is not complicated. Probate is complicated.
5. Is it possible to avoid a probate if I give my house to my children before I die by simply putting their names on the deed?
A. Joint tenancy can avoid probate but it can create other serious problems such as gift tax liability or the possibility that a judgment could be levied against your property, possibly leading to a forced sale of your home.
6. What if I need to change my trust in the future?
A. A living trust can be revoked or amended any number of times before death or incapacity. It is the most versatile and flexible estate planning tool available.
7. Does everybody need a living trust?
A. No. A good attorney should analyze the individual situation and assets of each client. A well drafted will can often suffice, particularly for young people just starting out with only a few assets. However, if you own a home in Hawaii, you may need a trust.
8. How do I “fund” my trust?
A. Any asset with a deed, title or other evidence of ownership can be transferred into your trust. Your attorney should prepare the necessary conveyance documents to transfer your real estate into your trust and provide you with detailed instructions on how to transfer other assets into your trust.
9. Can I save money by using “do-it-yourself” trust and will forms?
A. Sure. You can also perform surgery on yourself. All you need is a good sharp scalpel. The laws of wills, estates and trusts are extremely complex and the services of an attorney thoroughly familiar with the estate, gift and income tax ramifications of your estate plan should be sought.
10. My spouse and I are only in our 50’s. What’s the hurry? Can’t we just stick with our wills now and do trust later
A. There is no hurry – not if you know exactly when you are going to die. If the economics of a trust makes sense to you… do it now. It is the very nature of the uncertainty of death that should compel each of us to avoid the temptation to procrastinate.
We can help you determine if a living trust is right for you and your family.