POLL: Wills vs. Living Trusts

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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For estate planning, do you use

A Will only
55
40%
A Living Trust + Will
45
32%
Neither - some other estate planning tool
3
2%
Neither - haven't got around to it.
36
26%
 
Total votes: 139

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Chan_va
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POLL: Wills vs. Living Trusts

Post by Chan_va » Tue Jul 29, 2014 7:54 am

Folks,

I know this topic has been discussed before, but I don't think we have had a poll on this topic. I am trying to decide between a will and a will+living trust, and wanted to see what's more common out here.

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Re: POLL: Wills vs. Living Trusts

Post by bsteiner » Tue Jul 29, 2014 8:04 am

Revocable trusts make sense in some cases, and in some states. However, they're overhyped and oversold, and for most people in most states are unnecessary and tend to be a distraction.

Like any tool in the toolbox, we'll use it where it's appropriate, which is some but not most of the time.

Asking whether he/she should create a revocable trust without giving any facts that might suggest that it would be appropriate in his/her particular situation is like asking whether he/she should use a fork or a spoon without saying whether he/she is eating a piece of chicken or a bowl of soup.

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Chan_va
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Re: POLL: Wills vs. Living Trusts

Post by Chan_va » Tue Jul 29, 2014 8:11 am

bsteiner wrote:Revocable trusts make sense in some cases, and in some states. However, they're overhyped and oversold, and for most people in most states are unnecessary and tend to be a distraction.

Like any tool in the toolbox, we'll use it where it's appropriate, which is some but not most of the time.

Asking whether he/she should create a revocable trust without giving any facts that might suggest that it would be appropriate in his/her particular situation is like asking whether he/she should use a fork or a spoon without saying whether he/she is eating a piece of chicken or a bowl of soup.


Completely agree with you. However, I think it's still instructive to see how popular each of these tools are on aggregate. It's one more data point to add when you make your decision, but many other personal factors also come into play.

chaz
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Re: POLL: Wills vs. Living Trusts

Post by chaz » Tue Jul 29, 2014 9:58 am

I have both.
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Re: POLL: Wills vs. Living Trusts

Post by Dave55 » Tue Jul 29, 2014 10:56 am

We have both.
Dave

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Sheepdog
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Re: POLL: Wills vs. Living Trusts

Post by Sheepdog » Tue Jul 29, 2014 11:17 am

I am surprised that at this point of the survey, 20% of the responders do not have a will. For those of you who say that they haven't got around to making a will, get around to it. You can die today. If you do, then what? Three weeks ago a close friend was eating dinner with his wife. He just fell from his chair...dead....no cry, no pain...just dead. Completely unexpected. What about their will? None. His wife said they were thinking of it, but they never got around to it. Now she has a mess....creditors, grown children (adopted) are going after her money and his property already. Unbelievable. His business isn't even in her name either. He was not thoughtful in leaving her in this mess. Actually, he was negligent. I liked him, but now, I am upset with his memory.
Who or what charity do you want your money to go to? If you have a spouse, what if you both die together, what then? If you have a child, who will take care of them? Even if you are single, don't you want to be the one who makes the decisions on inheritances? Even if you say, "I don't care", think of your survivors.
Last edited by Sheepdog on Tue Jul 29, 2014 11:21 am, edited 1 time in total.
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Re: POLL: Wills vs. Living Trusts

Post by Christine_NM » Tue Jul 29, 2014 11:20 am

I was executor of my Mother's living revocable trust. For the most part it went OK but some things took too long, like locating the lawyer who had the original will and trust documents and dealing with T. Rowe Price. Both of those I had to delegate to a lawyer. Emotions were close to the surface and I had even less patience than usual.

For myself I see no need for such a trust. There are only two beneficiaries, one friend and one college. I named the CPA firm that does my taxes as executor. The lawyer who drew up the latest will said probate would be easy because the executor is already specified.

Years ago an estate lawyer tried to sell me a revocable trust. There were basically 3 benefits, only one of which I can remember -- privacy. No big deal.
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Re: POLL: Wills vs. Living Trusts

Post by goblue100 » Tue Jul 29, 2014 1:36 pm

Sheepdog wrote:I am surprised that at this point of the survey, 20% of the responders do not have a will. For those of you who say that they haven't got around to making a will, get around to it. You can die today. If you do, then what?


Does everyone even need a will? I understand if it is a messy situation with lots of creditors and claimants, but I am still married to my first wife and we have one adult daughter. The bulk of our assets is in 401ks / IRA's which all have current and correct beneficiary forms filed. Our only debt is our mortgage and most of other assets are titled jointly. I don't really see what good a will would do us?

As the primary account caretaker and investor I have created a Death Book which my wife is aware of that I update once a year. It has account info, passwords, and balances as well as my thoughts on how best to manage the money going forward.
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Re: POLL: Wills vs. Living Trusts

Post by Sagenick48 » Tue Jul 29, 2014 7:17 pm

I agree with bsteiner that "living trusts" are over hyped and oversold. I find particularly obnoxious the folks who buy you lunch to sell you a "trust" that says either "New York" or "California" law applies (I live In flyover country); still I have found living trusts to be useful both personally, in my Dad's estate, and in some of my clients situations.

In my Dad's case, we were able to distribute the bulk of his assets within 3 months of his death.

With respect to clients, the living trust allows for both incapacity planning, you can get successor trustees in place with a doctor's letter (where I come from) without having to go to Court for a guardianship, well as being able to take interim actions such as putting up real estate up for sale without waiting for a personal representative to be appointed or getting a special administrator.

So there is a place for them. Still, they are "oversold."
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sans souliers
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Re: POLL: Wills vs. Living Trusts

Post by sans souliers » Tue Jul 29, 2014 9:18 pm

In my case, a simple will should do the trick. Most assets are at Vanguard with beneficiaries and percentages assigned. Local charity is a beneficiary, too.
Property and real estate are what's covered in the will, with distributions to the same beneficiaries after liquidation, dependent on the speed taken by the executor.
Sometimes pessimism leaves me pretty well prepared for when things don't go my way, and pleasantly surprised when they do.

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Re: POLL: Wills vs. Living Trusts

Post by Bill M » Tue Jul 29, 2014 9:36 pm

DW's BIL is a lawyer, so FIL had trusts, several of them. Settling his estate was a huge mess (it didn't help that BIL declined as executor, citing conflict of interest), and ended up costing about $250K in fees.
Dad had just a will. I was executor, and settled his estate without any fees at all.
Mom had just a will, and I was executor, but the will was missing the "executor to serve without bond" clause. That mistake cost about $5K, but other fees were minimal.
So my experience says, stay away from trusts.

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Re: POLL: Wills vs. Living Trusts

Post by bcjb » Tue Jul 29, 2014 9:42 pm

goblue100 wrote:
Sheepdog wrote:I am surprised that at this point of the survey, 20% of the responders do not have a will. For those of you who say that they haven't got around to making a will, get around to it. You can die today. If you do, then what?


Does everyone even need a will? I understand if it is a messy situation with lots of creditors and claimants, but I am still married to my first wife and we have one adult daughter. The bulk of our assets is in 401ks / IRA's which all have current and correct beneficiary forms filed. Our only debt is our mortgage and most of other assets are titled jointly. I don't really see what good a will would do us? ... .


I'd appreciate hearing your opinions on this. When is it important to get a will? When you get married? Have children? Accumulate a lot of money? Reach a certain age?

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Re: POLL: Wills vs. Living Trusts

Post by mlipps » Tue Jul 29, 2014 10:00 pm

I don't have a will because I have no kids and everything is jointly titled with my husband that can be. I suppose if we both die simultaneously our parents will split the money. Not too concerned about that outcome. Maybe I should write a will so someone can inherit my dogs, that would be my only feat at this stage of life.

But I do appreciate this poll because my parents Do need a will and maybe a trust and don't have one.

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Re: POLL: Wills vs. Living Trusts

Post by Angrypuppy » Tue Jul 29, 2014 11:12 pm

bcjb wrote:
goblue100 wrote:
Sheepdog wrote:I am surprised that at this point of the survey, 20% of the responders do not have a will. For those of you who say that they haven't got around to making a will, get around to it. You can die today. If you do, then what?


Does everyone even need a will? I understand if it is a messy situation with lots of creditors and claimants, but I am still married to my first wife and we have one adult daughter. The bulk of our assets is in 401ks / IRA's which all have current and correct beneficiary forms filed. Our only debt is our mortgage and most of other assets are titled jointly. I don't really see what good a will would do us? ... .


I'd appreciate hearing your opinions on this. When is it important to get a will? When you get married? Have children? Accumulate a lot of money? Reach a certain age?


As soon as you have enough assets that you care where they go if you were to die.

Diogenes
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Re: POLL: Wills vs. Living Trusts

Post by Diogenes » Tue Jul 29, 2014 11:46 pm

Not sure where a Credit Shelter Trust fits in.

Living Trusts were overhyped some years ago. Especially since retirement accounts typically should not be placed into them.

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Re: POLL: Wills vs. Living Trusts

Post by pjstack » Wed Jul 30, 2014 12:44 am

We just have wills.

I used to have a living trust and went through to trouble of retitling everything, but later titled it back to JOWROS. Also have named beneficiaries for mutual funds, joint ownership of I-Bonds, cars, etc.

Wills seem sufficient for our needs.

For those of you who DON'T have wills, be aware that your state has its version of your will that shows who gets what (which may not coincide with your desires).
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celia
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Re: POLL: Wills vs. Living Trusts

Post by celia » Wed Jul 30, 2014 12:53 am

Chan_va wrote:I know this topic has been discussed before, but I don't think we have had a poll on this topic. I am trying to decide between a will and a will+living trust, and wanted to see what's more common out here.

Please don't decide what to do based on what others in the forum have done. Do what is best for Chan_va. Wills and trusts do different things, but can complement each other too.

Here is a big advantage to having a trust if you are married and have children: Suppose you die and then your spouse owns everything. Suppose again, that your spouse remarries and then dies. Who ends up with all the assets you worked for? It could easily be your spouse's later spouse, not your kids! You can prevent that from happening if you have a family living trust.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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Re: POLL: Wills vs. Living Trusts

Post by ks289 » Wed Jul 30, 2014 4:40 am

celia wrote:
Chan_va wrote:I know this topic has been discussed before, but I don't think we have had a poll on this topic. I am trying to decide between a will and a will+living trust, and wanted to see what's more common out here.

Please don't decide what to do based on what others in the forum have done. Do what is best for Chan_va. Wills and trusts do different things, but can complement each other too.

Here is a big advantage to having a trust if you are married and have children: Suppose you die and then your spouse owns everything. Suppose again, that your spouse remarries and then dies. Who ends up with all the assets you worked for? It could easily be your spouse's later spouse, not your kids! You can prevent that from happening if you have a family living trust.

Agree.
Consulting with an estate planning lawyer to establish a living trust may help you decide if you would benefit from other vehicles also. We have established an irrevocable life insurance trust, mechanisms to establish marital deduction trusts upon death of one spouse, etc which may save estate taxes in our state (maybe federal too at at time).

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Re: POLL: Wills vs. Living Trusts

Post by dolphinsaremammals » Wed Jul 30, 2014 5:22 am

I have a will and a revocable living trust. An advantage of the trust is that the trustee can dispose of property without having to get an okay from the probate court. This is a huge time and convenience savings for the trustee, who is already working his or her butt off, I can tell you from my experience doing this for my Mom's estate/trust.

If you are selling property, buyers are happier knowing they don't have to go through a court process also. You may lose some potential buyers who see the court issue as a hassle.

In my town, having property in a trust instead of the estate saves on the town taxes, since only the property in the estate counts as part of the town death taxes. For my Mom's situation, this saved the beneficiaries about $1000.

What's titled into my trust is my home and real estate I own, and non-IRA financial accounts. IRAs are of course not in it. There is a provision in the will that anything else not in the trust at the time of my death goes into the trust automatically. This takes care of cars and miscellany and anything that might be in transit like munging accounts.

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Re: POLL: Wills vs. Living Trusts

Post by Sbashore » Wed Jul 30, 2014 10:36 am

I have both. They're not redundant. The will addresses specifics I wanted to take care of outside of the trust.
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Chan_va
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Re: POLL: Wills vs. Living Trusts

Post by Chan_va » Wed Jul 30, 2014 10:38 am

Thanks for the responses all. I thought plain old wills would be much more common, but looks like it's neck and neck with wills + trusts.

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Re: POLL: Wills vs. Living Trusts

Post by Angrypuppy » Wed Jul 30, 2014 10:43 am

Not a single person in my family has died without somebody contesting their will. 4 people in the last few years.

One of the reasons we have a trust is it's harder to contest. The last thing we want is our two kids driven apart fighting over whatever size estate we may have.

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Re: POLL: Wills vs. Living Trusts

Post by placeholder » Wed Jul 30, 2014 11:29 am

^^^ Add the "nuclear option" where anyone who unsuccessfully challenges the will is disinherited.

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Re: POLL: Wills vs. Living Trusts

Post by MP1233 » Wed Jul 30, 2014 11:47 am

goblue100 wrote:
Sheepdog wrote:I am surprised that at this point of the survey, 20% of the responders do not have a will. For those of you who say that they haven't got around to making a will, get around to it. You can die today. If you do, then what?


Does everyone even need a will? I understand if it is a messy situation with lots of creditors and claimants, but I am still married to my first wife and we have one adult daughter. The bulk of our assets is in 401ks / IRA's which all have current and correct beneficiary forms filed. Our only debt is our mortgage and most of other assets are titled jointly. I don't really see what good a will would do us?

As the primary account caretaker and investor I have created a Death Book which my wife is aware of that I update once a year. It has account info, passwords, and balances as well as my thoughts on how best to manage the money going forward.


I agree. My MIL has a very small estate which will be divided equally among her four children. Why should she spend money on a legal document that will have no impact?

All our accounts have correct beneficiaries (our two sons) listed. We have no debt. Our house is the only item our sons would need to deal with when we are gone, and I do not see anyone challenging our son's rights in this matter.

I can see the need for a will in cases of complex extended families, or where there is an item that cannot be split in an equitable fashion between heirs. However, I think the accurate listing of beneficiaries takes away most of the arguments for a will. Am I missing something?

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Re: POLL: Wills vs. Living Trusts

Post by dolphinsaremammals » Wed Jul 30, 2014 12:58 pm

MP1233 wrote: However, I think the accurate listing of beneficiaries takes away most of the arguments for a will. Am I missing something?


Planning on leaving anything to charity?

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Re: POLL: Wills vs. Living Trusts

Post by dolphinsaremammals » Wed Jul 30, 2014 12:58 pm

placeholder wrote:^^^ Add the "nuclear option" where anyone who unsuccessfully challenges the will is disinherited.


I have that in mine, but I wonder, do they actually work?

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Re: POLL: Wills vs. Living Trusts

Post by Steelersfan » Wed Jul 30, 2014 3:31 pm

Chan_va wrote:Thanks for the responses all. I thought plain old wills would be much more common, but looks like it's neck and neck with wills + trusts.


I expect as the reality of the higher estate tax limit ($5,340,000 per person, double that if you're married, and indexed in future years for inflation) sinks in over time, the use of trusts will slowly diminish since there is less need to create a trust just to avoid taxes.

Several more states have recently eliminated their estate tax so that's a factor too.

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Re: POLL: Wills vs. Living Trusts

Post by MP1233 » Wed Jul 30, 2014 4:10 pm

dolphinsaremammals wrote:
MP1233 wrote: However, I think the accurate listing of beneficiaries takes away most of the arguments for a will. Am I missing something?


Planning on leaving anything to charity?


Yes, but that will be after we have been retired for a few years and have a firm grip on our retirement finances. If we were to die unexpectedly, suddenly, and early, our estate would go exclusively to our sons.

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Re: POLL: Wills vs. Living Trusts

Post by Kevin M » Wed Jul 30, 2014 4:22 pm

Will + living trust. In my state, CA, with a living trust settling the estate is much easier and less expensive. I have settled two estates with living trusts myself. For one I did not use an attorney at all, and for the other I only used an attorney to file a court document related to real estate taxes.

I recommend reading the NOLO press books on estate planning and living trusts. You can create your own will and living trust if your situation is not complicated. Attorneys on this forum will tell you otherwise, but the NOLO press books also are written by estate attorneys. It's good to understand the different points of view.

Another advantage of a living trust is that you can buy an extra $10K of I Bonds each year, which I do.

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Re: POLL: Wills vs. Living Trusts

Post by Lafder » Wed Jul 30, 2014 5:29 pm

I am surprised by some of the replies. Those of you thinking a will is not necessary are creating a lot of extra unnecessary paperwork for whoever survives you. Having a will is much more straightforward. Not having a will may take time to prove there is in fact no will!

To be clear, if one makes a trust, they ALSO make a will. The will may say something like "anything not specifically mentioned/titled in the trust is left to the trust."

A relative of mine died with under 100k in assets. She had already added a family member to her main bank account and those funds were distributed without issue and without going through probate. However the 2000 she had in a retirement account and another small account were almost not worth the effort to get them. She had not listed a beneficiary. In addition to the death certificate we had to provide a small estate affidavit I believe notarized saying that she had not had to go through probate due to the small size of her estate. There were a lot of phone calls and back and forth paperwork to get that 2000$

We met with an estate attorney to discuss what we wanted, and then again when we read,signed and picked up the actual will. He told us MOST people die without a will.

As part of our will package he also had us do medical power of attorney and living wills, as well as power of attorney in case my husband or I are incapacitated, as well as specifying what happens to our minor children. Those are important parts too!

We discussed the +/- of a trust. He said at that point our estate (which makes it sound more grand than it is) was at a $ point that a will made more sense. He said there would be a little more cost after death than a trust. But that a trust would cost more up front than the will would cost in the end. He said if our estate doubled it would make more sense to consider a trust.

He brought up many questions we never would have thought to address if we had done a will ourselves.

Our will includes provisions for our minor children , and as it was explained to me, upon death if my spouse and I both die when the kids are minors, the life insurance proceeds do go into a type of a trust then and it is already spelled out. It is just not formed unless we both die when they are minors.

As others have said, it makes the most sense to me to title accounts and property with beneficiaries or hold JTWROS whenever possible to avoid the extra hassles of probate and being part of the "estate". When my grandmother died all we had to do was show Vanguard her death certificate, and they divided her account to the beneficiaries as she had specified. It was titled in separate accounts for her heirs within a week of us starting the process. No tax was withheld.

As far as the comment about a husband and wife making a trust, one spouse dying, and the other remarrying. Well the surviving spouse could close the trust or redo the beneficiaries. So there is no guarantee a revocable trust would go to kids as initially intended.

As far as the comments about letting the state or probate court decide how your assets will be divided, you should read up on the "per stirpes" inheritance rules in your state to be sure it goes as you wish. You may think it goes to parents, but what about siblings, nieces/nephews/cousins etc. Different states put different priorities on who the rightful heirs are to unclaimed assets.

Also, can whoever needs to take care of bills and managing your house manage it without any access to your accounts? If your estate goes through probate there is a minimum amount of time to get things divided and retitled.

There are pluses and minuses to both. In our case if my husband or I die, everything needs to be retitled in one name. But if it was a trust, the titling would not have need to be changed unless the trust was ended.

All methods require a degree of effort. it is just a question of when and how much effort.

Those of you who do not even have a will, I really strongly encourage you to go ahead and get one, even if it is just something you handwrite or print from online. You can look up the rules for a legal will in your state. In most cases any will is better than no will. And why put survivors through more stress than necessary when they are mourning your loss?

My full disclaimer is that no one in my family has passed with a trust in place, so I do not have personal experience dealing with that for comparison.

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Re: POLL: Wills vs. Living Trusts

Post by LAlearning » Wed Jul 30, 2014 5:36 pm

Sheepdog wrote:I am surprised that at this point of the survey, 20% of the responders do not have a will. For those of you who say that they haven't got around to making a will, get around to it. You can die today. If you do, then what? Three weeks ago a close friend was eating dinner with his wife. He just fell from his chair...dead....no cry, no pain...just dead. Completely unexpected. What about their will? None. His wife said they were thinking of it, but they never got around to it. Now she has a mess....creditors, grown children (adopted) are going after her money and his property already. Unbelievable. His business isn't even in her name either. He was not thoughtful in leaving her in this mess. Actually, he was negligent. I liked him, but now, I am upset with his memory.
Who or what charity do you want your money to go to? If you have a spouse, what if you both die together, what then? If you have a child, who will take care of them? Even if you are single, don't you want to be the one who makes the decisions on inheritances? Even if you say, "I don't care", think of your survivors.


Whoa whoa whoa. I am young and married. Our major assets include a car (with her name on the title), and retirement accounts (with either her name in the title or beneficiary). That's all we got. No kids, no house, no business. My survivors would be our parents, who wouldn't even keep the TV we have as they have nicer ones. The most important document is the one that says where everything is, bills, etc.

Obviously things change and when needed we will address our "estate" planning.
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celia
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Re: POLL: Wills vs. Living Trusts

Post by celia » Wed Jul 30, 2014 6:32 pm

If your estate goes through probate (with or without a will), it becomes a matter of public record (and phone calls, solicitations in the mail).

The settling of a trust is done privately. No-one outside of the trustee and beneficiaries has any right to know what the assets are and what will happen to them.
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Re: POLL: Wills vs. Living Trusts

Post by Lafder » Wed Jul 30, 2014 10:15 pm

Lalearning and all,
I admit I did not have a will until way past when I should have. I think the risk is that most people start out like you in a reasonable position to not have a will. Then life happens, assets accumulate, kids are born, and the years go by with no will. According to the estate attorney I spoke with, most people never get around to making a will before they die. Maybe we just all live in denial that we will somehow know when our time is close.
lafder

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Re: POLL: Wills vs. Living Trusts

Post by Kevin M » Wed Jul 30, 2014 11:33 pm

My wife and I wrote out a simple will ourselves, probably using some template from a book (many years ago). When my wife died about ten years ago, the will served its purpose just fine.

However, in the process of settling my wife's estate, I met with an attorney who either was ignorant or dishonest and told me that I'd have to go through probate, and he'd only charge me $20K (or some other ridiculous amount) if I signed a contract with him that day. Fortunately I found another attorney who was competent and honest. He charged a few hundred dollars to help me settle the estate (no probate required if spouse is only heir) and to write up a living trust document (and new will) for me.

Although the first attorney was a jerk, at least talking to him helped me to learn that probate in this state can be very expensive. I went on to read a bunch of books on living trusts and settling estates, and even helped a few family members create their own living trusts (one of which I ended up settling with no problems).

Bottom line is that creating at least a simple will is very easy, and it may save your heirs some grief. As your assets grow and your estate becomes more complex, a living trust or some other type of trust may be useful as well.

Kevin
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Re: POLL: Wills vs. Living Trusts

Post by flyingbison » Thu Jul 31, 2014 9:14 am

Kevin M wrote:My wife and I wrote out a simple will ourselves, probably using some template from a book (many years ago). When my wife died about ten years ago, the will served its purpose just fine.



My state provides templates for a standard will, and standard will with a trust: https://docs.legis.wisconsin.gov/statut ... es/853.pdf

I wonder how many other states have something similar available.

bsteiner
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Re: POLL: Wills vs. Living Trusts

Post by bsteiner » Fri Aug 01, 2014 5:05 pm

Chan_va wrote:
bsteiner wrote:Revocable trusts make sense in some cases, and in some states. However, they're overhyped and oversold, and for most people in most states are unnecessary and tend to be a distraction.

Like any tool in the toolbox, we'll use it where it's appropriate, which is some but not most of the time.

Asking whether he/she should create a revocable trust without giving any facts that might suggest that it would be appropriate in his/her particular situation is like asking whether he/she should use a fork or a spoon without saying whether he/she is eating a piece of chicken or a bowl of soup.


Completely agree with you. However, I think it's still instructive to see how popular each of these tools are on aggregate. It's one more data point to add when you make your decision, but many other personal factors also come into play.


It varies considerably from state to state.

Almost all of our California clients and their family members have revocable trusts (prepared by California counsel).

None or almost none of our New Jersey clients have revocable trusts, since probating a Will in New Jersey is very simple (the court clerks will usually fill out the forms for you, the filing fee is a few hundred dollars, and after that you don't have to deal with the courts unless there's a dispute).

A small percentage (perhaps 5%) of our New York clients have revocable trusts. In New York, in order to probate a Will, you have to first notify the people who would inherit absent a Will. Sometimes a client doesn't have any close relatives, and doesn't know who his nearest relatives are, or where they are. A revocable trust is a workaround.

A somewhat larger percentage (perhaps 10%) of our Florida clients have revocable trusts. In Florida, the personal representative (executor) has to be either a relative or a Florida resident. Sometimes a client wants someone else (such as his/her accountant in his/her former state) as personal representative. A revocable trust is a workaround, since Florida does not have a similar restriction on who can be a trustee.

Some states tax the estate of a resident as a resident estate, but tax a trust based on the residence of the trustees. If the estate is expected to receive a large amount of income during the period of estate administration, a revocable trust with no trustees in that state will avoid state income tax on that income, assuming (i) the estate and the trust don't make a Section 645 election to treat the trust as part of the estate, and (ii) the trustees don't live in states that tax a trust based on the residence of the trustees. We once avoided state income tax on about $10 million of income in that way when a corporation paid a large dividend in 2010 to lock in the 15% tax rate on qualified dividends in case it expired, and so it could elect S status despite having passive income.

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