5 REASONS YOU SHOULD HAVE A WILL AND A TRUST
1. If I have a Will, won't I avoid Probate?
No!!! A Last Will and Testament is what the Probate Court reviews to determine which of your assets should go to which of your heirs/beneficiaries. If you die without a Will, (dying "intestate") there are State Statutes designed to direct the Probate Court to determine those issues. Nonetheless, you should execute a Will to direct how you want your personal items to be specifically given (for example, all of my pets in my household shall, upon my death, be given to my sister; my gold ring shall be devised to my grandson; all of my pictures on Facebook and Shutterfly shall be addressed by my friend, who will used to create my memorial page). Plus, a Will can direct how you wish for your final remains to be disposed (buried, cremated, memorial, no memorial, etc.).
However, when a Trust is done properly, it can be like magic and help your heirs avoid Probate. Plus, unlike Probate, which is a formal court proceeding that can be very lengthy and costly, no matter how small (or big) your assets total, a Trust is administered mostly privately, usually without court intervention. This helps prevent that long-lost great nephew from making any claims on the distribution of your assets. Your private assets remain private, with few exceptions! Also, unlike Probate, the administration of a Trust means that after your death, the distribution of your remaining assets will be distributed seamlessly and faster, since little to no court intervention is necessary.
2. I am worried that someone in my family will contest my Last Will and Testament; couldn’t they do that with a Trust, too?
Possibly, however, if your assets are transferred properly into the Trust while you (the Grantor) are still alive and competent, then it less likely that attacks on the provisions contained in the Trust will be successfully contested as you (as Grantor) already acted on your intent, not just signed the documents, as you do with a Last Will and Testament.
Also, a Revocable Trust can be easily amended so, unlike a Will, less formalities are needed to change your provisions contained therein, as long as the Trust expressly grants that power within the Trust initially (which is highly suggested). Likewise, the ability to easily make amendments to your Trust will substantially save potential costs, than compared with executing a new Will and/or Codicil to your current Will.
3. Dementia and Alzheimer's are a concern of mine. Won't my Will address those issues?
NO!!! A Last Will & Testament only is reviewed by the Probate Court upon your death; it does not have any impact on your life's decisions. However, many Revocable Trusts contain provisions directing a designated individual(s) on what to do and who you wish to administer your assets in YOUR LIFETIME for YOUR sole benefit should you definitively declared incompetent.
Many clients are concerned that their children should receive all of their assets upon their deaths. The reality is that with 1 in 6 women, 1 in 11 men in our country over the age of 65 declared having Alzheimer's, you will likely live a longer life than you anticipate, and you very well may have Dementia and/or Alzheimer-related issues in the later part of your life. This means that your assets will need to be applied for your round-the-clock care for an extended period of several years. Although long-term care insurance (which I highly recommend purchasing) will help offset the costs for such care, you still need to address the legal requirements of that situation. A Living Revocable Trust can (and should) reflect your intent and wishes for such a situation by including a Pre-Need Designation of Guardianship, which is highly suggested and to which a Will cannot address.
In addition, to a Will and Revocable Trust, I also highly suggest that my clients create their "living documents":
(1.) a Health Care Surrogate Designation and Living Will (also called "health care directive"); (2.) a Durable Power of Attorney (a "DPOA"); and (3.) a HIPAA (health instructions permitting provider authorization, in accordance with the Health Insurance Portability and Accountability Act)
A Health Care Surrogate Designation and Living Will reflects your end-of-life desires; in contrast, your HIPAA permits as many people as you choose to discuss medical issues with your health care professionals as needed to discuss your medical issues but NOT to make decisions on your behalf. The Durable Power of Attorney allows the people appointed to make financial decisions on your behalf, if you are temporarily incapable of doing so.
4. I have a home and live right now in one state but will be retiring and living in my second home in another state, while still owning property in my current domicile. Won't my Will address all of these issues?
A Will is usually state-specific, so when you declare your permanent residence in a different state you should update your Will to reflect that. Moreover, a Trust is a multi-state instrument which can avoid multiple Probate proceedings in different states no matter where your real estate and/or assets are located. If you only have a Will, then your heirs will likely, depending on the wording of your deeds, have to enter Probate into each state that you own real property at the time of your death (called ancillary Probate administration). This will extend the length and cost of the Probate proceedings considerably. However, by transferring your real property into the Trust during your lifetime, all of that time and expense can be significantly saved.
5. Isn't a Trust just for rich people and very complicated?
No! If you own any real estate and have any assets that you wish protected, a Trust certainly should be an instrument you consider. The initial work that you will have transferring assets into the Trust is not that burdensome and will potentially prevent Probate, Guardianship and Elder Abuse -- well worth the time spent while you are still capable and competent to do so! A Revocable Living Trust will not save any applicable Federal Estate Taxes but certainly can save you and your loved ones, time, attorney and court fees, and emotional stress by addressing probate and guardianship for yourself BEFORE these issues arise. At the least, a Will should be executed but you should also highly consider executing a Trust, as well!
Why encourage my clients to execute a Trust that may entirely avoid the need for Probate, which would generate significantly more income for my firm? Doesn't that ultimately hurt my practice? Yes, but I do so because I work hard to provide good counsel to my clients, not just what increases my own income. I see first-hand what happens when someone does not take preventative measures to avoid probate and guardianship proceedings. I truly am here to help you avoid that situation, if possible!
BEFORE YOUR TROUBLES HIT THE FAN,
PLEASE FULLY EXECUTE YOUR ESTATE PLAN!!