Estate planning is meant to give you the peace of mind of knowing your legacy and loved ones will be secure once you are gone. Some estate planning tools are used to distribute assets to your beneficiaries after you pass away. Many use wills to accomplish this task.
While your will is an important piece of your estate plan, there tend to be more efficient and reliable ways of facilitating asset distribution. A trust is an arrangement in which a trustee (appointed by the trust’s creator) manages trust property for the benefit of trust beneficiaries. In other words, a trust can function similarly to a will and be used to transfer assets to your heirs. Below, we review 5 reasons you should consider creating a trust and incorporating it into your estate plan.
Reason #1: Avoidance of Probate
Probate is the court-supervised process through which a deceased person’s estate is settled. The decedent’s will is used to guide the process, but instructions for distributing assets will not be carried out immediately. First, the appointed personal representative must initiate probate, notify interested parties (including creditors, heirs, and beneficiaries), inventory estate assets, settle creditor claims, file taxes, and resolve disputes. Only near the conclusion of probate are assets finally distributed.
Unfortunately, probate is known for being time-consuming and rife with conflict. In many cases, the estate settlement process will take many months or even several years, especially if someone disputes the validity of the will. Assets named in a will are effectively “stuck” during probate and cannot be given to your intended beneficiaries until the court gives its permission.
Assets placed in trusts are in most cases exempt from probate. Consequently, ownership of trust assets can generally be transferred whenever the trust instructions specify. There is no need to wait for probate to wrap up.
Reason #2: Privacy
Many people do not realize that anyone will be able to review the contents of their last will and testament once they pass away. Wills are considered a matter of public record once they are entered in probate court. Anyone will be able to look up your will’s instructions, assets named in your will, and your chosen beneficiaries. Any probate conflicts, including will contests, will also be public.
You may understandably wish to protect the privacy of your loved ones after you are gone. The contents of trusts are private and known only to the trust’s creator, the trustee, and trust beneficiaries. If privacy is a priority for you, a trust may be able to therefore provide more peace of mind than a will.
Reason #3: Customization and Flexibility
When you write your will, you can only specify who will receive your assets. In most cases, you will have no say when or why transfers of ownership occur. Property named in your will is simply distributed to your chosen beneficiaries near the conclusion of probate.
You cannot generally ask for property to be “held” until a later date or until certain conditions are met. Your personal representative will need to distribute all assets in order to wrap up probate and settle the estate. The only prominent exemption involves minor children: You can in these instances leave assets to a custodian, who will hold them until the minor beneficiary comes of age.
Trusts allow significantly more customization and flexibility. Because the trust exists outside of probate and persists after you are gone, you can require the trustee to follow far more sophisticated instructions. For example, in the case of a minor children, you may only choose to “release” their inheritance once they complete their college education.
Reason #4: Tougher to Contest
Any interested party can “contest” the validity of your will or trust. An interested party is someone who stands to benefit from the outcome of the challenge, such as an heir or named beneficiary. The contesting party must establish that the will is fraudulent, written under duress, or unenforceable due to lack of capacity.
When a will is contested, the probate process cannot continue until the dispute has been settled. These conflicts can significantly delay the distribution of your assets or jeopardize it entirely: If your will is determined to be unenforceable, your property may be subject to “intestate succession” if no valid will can be located. This means your will’s instructions will not be followed, and your assets will instead be given to your most immediate surviving relatives.
While trusts can also be contested, they tend to protect assets better than wills. Trusts must almost always be created in consultation with a legal professional, and an attorney can help you avoid common mistakes that might otherwise make your estate plan unenforceable. Furthermore, trusts require continued involvement from the trust’s creator and the trustee, making it more challenging to prove a lack of capacity, duress, or some other disqualifying factor.
If you are worried about conflicts emerging between heirs and beneficiaries after you pass away, it would be wise to consider a trust. While no estate planning document is invulnerable, a properly structured trust will typically have far more inherent safeguards than your will.
Reason #5: You Can Still Use a Will
You do not need to exclusively use a will or a trust to manage asset distribution. In fact, it is often in your best interest to simultaneously use both tools.
Only your will lets you appoint a personal representative and a guardian for your minor children. It is also likely that some of your assets will not be placed in your trust at the time of your passing. Fortunately, you can create what is referred to as a “pour-over will.” A pour-over will requests that all remaining estate assets be transferred to your trust once you are gone.
By using a pour-over will, you can ensure your trustee will take possession of all of your property. You can also still use the will’s exclusive features and facilitate what should be a simplified probate process.
Explore Your Trust Options Today!
Every adult should have an estate plan, no matter their age, health, or financial circumstances. Our attorneys at May, Rammell & Wells have over 70 years of collective legal experience and are ready to help you understand your planning options. We can create a robust trust that honors your wishes, protects your assets, and provides the comfort you deserve.
Request a consultation today by calling (208) 623-8021 or contacting us online.
