I am often times asked whether a will or trust is appropriate for one’s estate planning needs. For various reasons, many people believe that a trust is always the way to go. However, that is not always the case. Here are some considerations to weigh when deciding between a will and trust. Additionally, it is important to note that trust will have a will that pours into the trust so that all assets are captured.
Probate Proceedings:
One important consideration is whether one desires the probate process to be utilized. A will is probated through the courts. This is not the same in a living trust. If all assets are within a trust, then there should be no need to probate in order to transfer or settle the trust assets to the beneficiary. This could reduce the expenses involved with the transfer of assets. However, this lack of judicial oversight for a trust can be a bad thing if nefarious characters are involved. Additionally, the probate process sets the course and thus allows the beneficiaries with a forum to resolve issues, while a trust does not provide the same if the trustee does not utilize certain procedures within the applicable time frames.
Privacy Considerations:
Another consideration is the privacy and confidentiality between a will and trust. A will is deposited with the clerk of court and thus becomes a public document; however, the value of the assets subject to probate administration are set forth on an inventory, and that inventory is sealed. The living trust is not deposited with the clerk of court and does not becomes a public document; however, the document contents will possibly be seen by others during the lifetime of the grantor. For example many financial institutions will ask for a copy of the agreement.
Capacity Issues:
When it comes to a trust, the document can make it easier for the administration of the trust when the grantor is incapacitated. This can avoid the petition for and appointment of a guardian to handle the estate assets.
Creditors Claims:
There is a common belief that trust assets can escape the reach out creditors. Creditors can reach trust assets both while the grantor is alive. Additionally, creditor can reach trust assets after the death of the grantor, when the probate assets have all be extinguished, and when a creditor claim is enforceable against the estate.
Fiduciary:
For a will, only a Florida resident can be the personal representative of the estate, unless the nominated personal representative is a legally adopted child or adoptive parent of the testator, a blood relative of the testator, a spouse of the testator, or a spouse of an otherwise qualified person. A trust allows free range for who can be the trustee.