Quite often, I meet with clients who say all they need is a simple will. They may think that their assets aren't large enough to warrant a more extensive estate planning document. During my initial consultation, I make sure that I understand not only what their assets are but also I ask many questions so I can learn about their family dynamic, goals and desires. It is only after understanding the complete picture that I can recommend which document is the best vehicle for their specific situation. Sometimes they are correct and all their goals can be accomplished by using a will as the centerpiece of their estate plan. Other times the family decides they would prefer to plan using a living trust, rather than a simple will.
A living trust usually costs more to set up than a will for a number of reasons. Living trusts have a lot more to them, as they are set up to manage assets both during life and after death, whereas wills only come into effect after death. A trustee of a trust is named to manage the trust assets both during incapacity of the Trustmaker and after death.
One of the greatest benefits of a living trust is the ability to avoid probate. Probates can be timely, costly and easily contested. If a trust is properly funded, the court system can be completely avoided at the death of the Trustmaker.
Trusts are also private documents that will escape the public eye so that no one can learn your net worth and the names of your beneficiaries. This can be a great benefit in the modern world because it may save your loved ones from being preyed upon by those who learn that they just came into a bit of money. Also, since it is a private document, it is harder for those who believe they "deserve" more to contest a trust.
A living trust can be set up to provide asset protection for your beneficiaries. This means that their inheritance would be protected for them from things such as a divorce, creditors, bankruptcy, lawsuits, long-term care costs. Legacy planning can also be done, so upon the death of a beneficiary, anything remaining in their trust can be left to the beneficiaries of your choice, such as your grandchildren.
With a will, after a beneficiary receives an inheritance, upon their death, anything remaining goes to the beneficiaries of their estate plan, which is likely your daughter-in-law or son-in-law for a married beneficiary.
Tax planning is another benefit you can find with a living trust. With a taxable estate, a married couple can use a living trust to shelter some of their assets from estate taxes.
If you have a beneficiary with special needs who may already be receiving, or may someday qualify for, federal or state benefits, you want to set up a special needs trust for them to avoid interfering with, and potentially losing their benefits. This is much more convenient and cost-efficient to set up through a living trust, rather than a will.
After discovering all the benefits that can be drafted into a living trust, many choose to pay a little more now during life to get all the benefits of a living trust, and then also save more after death for their beneficiaries. It's beneficial to discuss your goals and family situation with an experienced estate planning attorney to discuss what type of planning is best to accomplish your goals.
If you would like to learn more about the benefits of a living trust and live on the Main Line in the areas of Devon, Berwyn, Paoli, Wayne, Villanova, Haverford, Bryn Mawr and Rosemont, please contact my office.