Is it better to leave my property by will or living trust?
I own my home, have several CDs, checking accounts, and savings -- also some annuities, and several stocks. The only insurance is my husband's, which isn't that much. I have a small IRA account; my husband's is a bit larger. Which is better for me: a will or a trust?
The first step for you to take is to look closely at the documents specifying how the title is held to the property you mentioned. Generally, property that you own with another person -- in joint tenancy, tenancy by the entirety, or community property with right of survivorship -- passes directly to the other owner or owners at your death, and you needn't provide for its passing in either a will or trust.
The same is true with property that has a designated beneficiary to take the property at death -- as is often the case with insurance, for example. That, too, will pass automatically to the named taker, outside a will or trust.
You can make either a will or trust or both to designate the person or organizations you want to take any remaining property. But you should be guided by a number of concerns.
A living trust, which passes property free from probate, rather than a will may not be a good choice if you:
- Expect to owe estate taxes when either you or both you and your spouse die -- which is most likely if you own property worth $2 million or more.
- Want to have some control over what happens to your property after your death, such as specifying that a house goes first to a relative, then to your children.
- Have any child who has a special need or disability, and you want to provide management for property that goes to him or her.
- Have children from one or more prior marriages who are likely to conflict with a current spouse.
A will alone may do, however, if you:
- Have set up most property ownership in joint tenancy or pay-on-death transfers.
- Own very little valuable property.
- Don't know someone you trust to oversee your property.
- Are involved in divorce proceedings, as some state laws bar creating such trusts once a divorce is filed.
I tell clients in my 'Emergency Estate Planning System' that a Will is a guaranteed ticket to probate court. I had a client (66 yrs old and Mom had a Will - the evil sister stole more than $476,899 from the estate )
The Trust is the only vehicle to bypass probate and have control over who your assets will be distributed to. Also, if you have younger beneficiary's, (ie. children) I ask my client's if it's ok to that 50% of that child's inheritance can go to the inlaw? Or worse yet, 100% to a creditor!! Yikes, don't leave this to chance.
Also, what many practicitioner's fail to clarify to clients is that you are 8 x more likely to become disabled than you are to die at work. The Trust has incapacity provisions to control your assets if you are disabled. The Will does not, the only way to do this is to go to probate court (and hire an attorney, pay thousands of dollars plus court costs)
Plus, NEVER place your IRA/Retirement Plan into your standard trust (if the plan is large enough) you should have an IRA Trust created for special asset protection, and stretch out options based on IRS guidelines.
Lastly, a Trust can not hold annuity's. they are created and transferred with whoever the beneficiary is (ie. usually spouses or kids), they are great financial tool with their 'guarantee's' but no asset protection when you die.
To your Life and Wealth,
Joseph J. Dadich, CPA, Esq. LLM FREE REPORT ' 15 Critical Mistakes your estate planning attorney makes and how to avoid them'tm firstname.lastname@example.org
It seems to me that most middle class people feel that trusts are for rich people… with lots of assets, property, investment accounts, large bank accounts, savings bonds, and so on. And it’s true, most affluent families, maybe the top end of upper middle class families up to rich and of course the super rich… use trusts to control and distribute their assets to their beneficiaries when they die. And most middle class people I come into contact with feel that a simple will, and estate, is the best avenue for them to go down when it comes to leaving their heirs an inheritance.
And as Seepajd says here in his little article, that avenue tends to lead to probate. As if that’s the worst thing in the world. I don’t know about that. I really don’t. I know a lot of lawyers will tell us that, and point us to trusts, which f course they get paid to draw up and sometimes manage. But I’m not so sure any more about this. Obviously, it’s clear trusts have their place, especially for wealthy decedents that have a lot of assets and cash to leave their beneficiaries. And maybe to defer taxes, or possibly eliminate some taxes. Plus maintain control over those assets… which frankly might make the person leaving those assets feel powerful and in control, which maybe isn’t all that great.
I see a lot of that sort of thing from the heir or beneficiary point of view, and many trusts seems to paint those beneficiaries into a corner, forcing them to deal with a (often very uncooperative) trustee… Often putting them in a strange position of waiting to get a handout every 5 or ten years, or yearly… Or a certain amount when they turn a certain age, and then the rest, often meager handouts, every year, say $3,000 or $4,000, in that range… Frankly as a trust beneficiary, besides of course appreciating the gift, I’d feel kind of insulted to get small handouts like that. If you’re going to gibe a gift, why not give it all at one time, like a real gift, instead of making people deal wit frequently unpleasant trustees all the time, just to get a crumb or two every year or monthly, whatever. Do you know what I mean.
Obviously we all appreciate someone leaving us money… but if you’re going to leave it – then why not really leave it, rather than playing games with it for the rest of a person’s life, literally. Like limiting beneficiaries in a big way with a Spendthrift Clause in so many trusts. Why bother. Just give them the darn money and have done with it! Even if it isn’t meager, and it’s larger amounts of cash every 5 or 20 years, it’s still sort of saying hey,. I don’t really trust you with a lot of cash, so I’ll parcel it out to you yearly, or whatever, and you can do what you like from there – rather than, you know, giving a loved one a really substantial amount of cash, allowing them to change their life, buy a great dream house, purchase or invest in a great business, or whatever. Why play games with inheritance money, simply to maintain control I suppose is what it boils down to! I don’t know, it just seems that way to me.
Not only that, with a probate estate an heir with cash flow problems can easily get a loan on inheritance, can borrow against an inheritance to get a nice sized probate loan, or inheritance advance, an inheritance loan or estate advance, or probate advance. With many trusts, a Spendthrift Provision or Clause usually stops that option in it’s tracks. If you’re having money problems, like so many people do these days, an inheritance in trust often won’t allow the beneficiary to do anything with that trust, to get a larger lump sum for example, to do something meaningful.
In my opinion, besides all the gamesmanship with inheritance money, making beneficiaries jump through all those hoops, or playing the waiting game for each handout, why not make it possible for your beneficiary to borrow money against their inheritance – smoothly, easily, and quickly – with a regular will, an estate in probate, so heirs can get an inheritance loan or inheritance advance from inheritance advance or probate loan companies, or inheritance loan companies. Heirs do need to become overnight “semi-expert” researchers on estate loans… probate advance or inheritance advance assignments, inheritance loans, inheritance cash advance or probate cash advance and inheritance advance assignments… from familiar probate loans companies like www.heiradvance.com, or www.inheritancenow.com or www.inheritanceadvance.com, some of the old pro inheritance advance companies or inheritance loans companies that offer similar inheritance cash advance or probate loan, inheritance advance services. It’s not everything, but why not leave heirs that option. And why not 86 all the inheritance money games and control issues. Hey, if you’re gonna give it – then give it! Don’t’ make heirs or beneficiaries struggle for it with a pain in the neck trustee… or wait months or years in between payments. Trust the person you’re leaving inheritance money to, and simply give it all if you’re going to give it. That’s the way I see it, and a whole lot of beneficiaries see it.
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