IS A TRUST BETTER THAN A WILL?

While a will and a trust are two different means of distributing assets to named beneficiaries upon your death they are different in practice.

A will is the traditional method of bequeathing your assets and has been around in various forms since Ancient Greece. A will is testamentary, meaning it is only effective upon your death. At that point it is entered into the probate court where it is “proven.” The court then monitors the administration process including payment of creditors, possible sale of property, accountings to beneficiaries, and ultimate distribution. The benefit to a will is that it is easy. It requires very few formalities for execution and does not require the retitling of assets. The downside of a will is the probate process. There are significant court fees, attorney fees, and administrator fees that are associated with probate. In addition, most courts are underfunded and overburdened causing delays in hearings. It is not uncommon for an “easy” probate to last 18 months.

On the other hand, a trust is document through which your assets are transferred and controlled by a manager called a trustee. In most cases, individuals or couples create a “revocable trust” in which they are the creators (settlors) and also the managers (trustees). Trusts become effective once funded and signed which means that a successor trustee can take over if one or both of the settlors becomes incapacitated. This avoids a costly guardianship proceeding where your assets and medical condition become public. Trusts also bypass the probate court which avoids court delays and court fees and keeps your estate confidential. This can mean significant savings to the beneficiaries. Trusts also give the creators the freedom to structure a distribution plan that is right for their loved ones. Trusts can create separate trusts for children or minors to control spending or create a special needs trust to safeguard a beneficiary receiving SSI or Medicaid. The downside to a trust is the initial set up fee which is usually more than a traditional will and the fact that assets need to be retitled in order for the trust to work properly.

If you would like to discuss whether a will or trust is better for your situation, feel free to contact the Law Office of Stephanie Macuiba at (815) 690-2203, (949) 697-5958 or stephanie@macuibalaw.com.