Wills v Trusts
ADVANTAGES OF A WILL
- Avoids Distribution Under The Law Of Intestacy. Without a Will, assets will pass to relatives under the laws of intestate succession. These laws have been drafted to be “fair” in the average situation, but most people would like to choose who will receive their estate upon their death.
- Permits The Nomination Of A Guardian For Minor Children. Without a nomination in a Will, the court will appoint a guardian of the person for children under age 18. Relatives are not always the best choice for a guardian and consideration must be given to the financial situation of the potential guardian, as well as his or her health, age and ability to love children.
- Waiver Of The Probate Bond. In the absence of a Will, the court will require a fiduciary bond to be posted by the administrator (executor) of the estate to guarantee the replacement of any funds embezzled or diverted by him. This is an additional cost to the estate and can be avoided if an executor is chosen that can be trusted. The bond requirement is usually waived in a Will.
- Choosing The Executor. The duties of the Executor of an estate can be very time consuming and frustrating, especially to a grieving spouse. In a Will, a qualified individual or a corporate trust company can be chosen to handle this procedure.
- Making Specific Gifts To Individuals. An individual may give specific items (e.g. jewelry, heirlooms, furniture or cash) with certainty that they will pass to the proper persons. Without a Will, written or oral instructions may not be carried out.
- Sale Of Assets During Probate. Additional expense to the estate can be avoided by permitting the sale of assets without publication by the executor of a notice of sale in the newspaper. A sale of assets may be necessary in order to pay death taxes and expenses of probate.
- Deferring Distributions To Minors. If parents die leaving minor children, each child’s share of the estate must be held in a guardianship account until he or she attains age 18 at which time the remaining share is distributed outright. Trust provisions in a Will can defer these distributions until a more mature age.
- Tax Savings. Certain substantial tax savings are possible through the use of trusts, which can be created in a Will.
- Peace Of Mind. Although this advantage cannot be measured in dollars and cents, when the estate is in order, an emotional load is lifted from the person who is concerned for his family’s well-being.
ADVANTAGES OF A TRUST
- Assets In The Trust Are Not Subject To Probate Administration. This saves executor and attorney fees and time (a probate may take 12 months or more to complete). It also results in more privacy as to who gets the estate, when they get it, and how much they get.
- Continuing Management. This is available if the Trustor becomes incompetent, disabled, or wants to be free of worries of the management without the necessity of a conservatorship (a costly and time consuming proceeding which is administratively cumbersome and a matter of public record).
- More Uniformly Accepted by Financial Institutions. Revocable trusts are more accepted by banks, title companies, and other financial institutions than a durable power of attorney.
- Immediate Management Upon Death. On the death of the Trustor, the successor Trustee can step in and manage the trust without delay or “red tape”. And, the successor Trustee can be in another state without complications.
- No Required Annual Court Accountings. Annual court accountings, without accompanying legal fees, are not required.
- Collection of Benefit Proceeds. Life insurance and retirement benefit proceeds can be collected by the Trustee and used after the death of the Trustor to care for family members without any need for court approval.
- Protection From Beneficiaries. The living trust may be more difficult than a Will for beneficiaries to attack.