Trust or Will ?


When selecting an estate plan, one fundamental choice is whether to choose to use a Trust or a Will.

Trusts have many advantages:

      1.  Trusts can reduce estate taxes,

      2.  Trusts can be used to plan how your assets will be administered after you are gone,

      3.  Trusts can be used to keep your estate out of probate,

      4.  Trusts can be used to plan distributions for beneficiaries that have special needs or beneficiaries on public assistance,

      5.  Trusts can keep your estate private.

Better than sliced bread, no ?  Actually Trusts do have many advantages, but sometimes the many advantages of Trusts are subject to hyperbole.  Trusts aren’t for everyone.  Estates under $5.12 Million this year will pay no estate taxes, with a Trust or just using a “simple” Will.  However, this amount is scheduled to be drastically reduced by January 1st, unless Congress acts to extend the tax free amount.  There are many assets that pass outside probate already.  If you estate contains only assets that pass outside probate, a Will may provide just as many advantages as a Trust for your estate for those assets.

Therefore, the advantages of Trusts depends on not only the size of your estate, but also on the composition of the assets of the estate as well.

If a Trust is not right for you, you should at least have a “simple” Will in your estate plan.  With a simple Will at least you will be able to designate who gets your estate and who you want to handle the administration of your estate.

When a Trust is employed in an estate plan, there will be a Will also.  Usually, there will be a “pour-over” Will.  A pour-over Will directs any assets that do end up in probate to be distributed over to the trust.  Assets may be left out of the Trust for many reasons, including: 1) assets the client forgets to fund into the Trust, 2) assets the client received shortly before death, and didn’t have time to fund into the Trust, and 3) assets the client deliberately leaves out of a Trust (there are good reasons for some assets to not be put into Trust).

There are many different kinds of Trusts, that accomplish different purposes.  The decision of whether to adopt a Trust, and what kind of Trust, is a very important decision to make during your estate planning.  Consult your legal advisor and consider the decision very carefully.

A longer memorandum is available on estate planning choices, including whether to choose a Trust or a Will, for a free copy contact the author: by filling out the contact form on the “contact us” page of this website, by mail, email, or telephone.