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Will vs. Living Trust: What's Best for You?
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Dec 2007
You have worked hard for your money and made every attempt to be a conscientious saver. So it's only natural that you want some control over what happens to your assets after your die. Even if you are a person of modest means, you have an estate—and several strategies to choose from to ensure your assets are distributed according to your wishes and in a timely fashion: your estate plan. The right strategy depends on your individual circumstances. For some, a living trust can be a useful and practical tool. For others, it may be a waste of time and money. What is a living trust anyway? And how does it differ from a will?
What Is a Will?
A will is a written document—signed and witnessed—that indicates how your property will be distributed at the time of your death. It is revocable and subject to amendment at any time during your lifetime. It also allows you to appoint a guardian for your minor children.
What Is a Living Trust?
A living trust provides lifetime and after-death property management. If you are serving as your own trustee, the trust instrument will provide for a successor upon your death or incapacity. Court intervention is not required. Livings trusts also are used to manage property. If a person is disabled by accident or illness, the successor trustee can manage the trust property. As a result, the expense, publicity, and inconvenience of court-supervised distribution of your estate can be avoided
If a living trust is properly written and funded you can:
· Avoid probate on your assets;
· Plan for the possibility of your own incapacity;
· Control what happens to your property after you are gone;
· Use it for any size estate; and
· Prevent your financial affairs from becoming a matter of public record.
While a trust sounds appealing, there are drawbacks. A living trust is more expensive to set up than a typical will because it must be actively managed after it is created. Most importantly, however, a living trust is useless unless it is funded. A living trust only can control those assets that have been placed into it. If your assets have not been transferred or if you die without funding the trust, the trust will be of no benefit as your estate will still be subject to probate and there may be significant estate tax issues.
Trust vs. Will Considerations
There are many positive reasons to establish a trust but do not overlook the fact that it will involve more upfront effort and expense. To determine if you should make the extra effort and invest in the expense of a trust, answer these questions:
Is informal probate an available option? Most states have an expedited or simplified form of probate for estates under a certain dollar threshold (that dollar value varies by state). If your estate could pass under an expedited form of probate, or if you live in a state where probate is not a complex or burdensome process, a will could be appropriate.
Do you have minor children? A trust allows you to establish provisions specifying when a child will be entitled to any assets held in trust.
Do you have children, grandchildren, or other dependents with special needs? In those instances the access or control those heirs have over their inherited property may need to be limited. With a standard will your property can be passed on to those heirs but a will alone does not allow you to exercise much control over their use of the property.
Will your estate be subject to estate taxes? If the value of your estate exceeds the current estate tax threshold, you may wish to consider setting up a trust with tax planning provisions. The estate tax threshold frequently changes, so be sure to check with the IRS to determine whether or not estate tax is a concern for you.
Will you actively manage your estate plan? If not, a living trust may not be a suitable solution. Again, a trust will only be beneficial if assets are transferred into it.
So what is best for you? In many respects, a living trust and a will accomplish similar objectives. A trust, however, allows you to realize other objectives that a will cannot. But those advantages don't come without a price. Whether or not a living trust is better for you than a will depends on whether the additional advantages are worth the cost. When choosing, remember that one size does not fit all. What is right for one person may not be right for everyone. Your estate plan should be prepared in a way that best meets the needs of you and your family.
This article does not address all the intricacies associated with wills and living trusts. Consulting with a competent attorney can help you make the right decision.
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Comments
Submitted by on Apr 14, 2010 - 7:51AM
I need to set up a Special Needs Trust for my son who is on SSI. I don't see any documents specific to Special Needs Trusts. Please let me know if you have.
Submitted by on Apr 19, 2010 - 7:28PM
I need one too. Have you gotten any response or luck finding one?
Submitted by on May 18, 2010 - 2:24PM
Thanks for your inquiry. Unfortunately, LegalZoom currently does not offer a special needs trust. If you want help finding an attorney, try our attorney referral network: http://attorneyconnect.legalzoom.com
Submitted by on Jul 6, 2010 - 8:28AM
do you do special needs trusts if not can you recommend one with experience in this area ??
Submitted by on Jul 21, 2010 - 12:52PM
Hi John, and thanks for your question. LegalZoom doesn't offer they type of trust you're interested in at this time. If you'd like to search for a local attorney to assist you with this document, however, go ahead and check out our attorney referral network: http://attorneyconnect.legalzoom.com
Submitted by on Sep 10, 2010 - 6:46PM
In Ohio I can refer clients to two options. First, I an option for people with not many assets and will need an inexpensive UNcomplicated trust. For those who have a more complicated or larger estate I can refer them to an attorney who has been doing Special Needs Trusts since the mid 1990's. If the trust is not drawn up properly then the government will take everything you leave the Special Needs person. Feel free to contact me with any questions as I have my own Special Needs child.
Submitted by on Oct 27, 2010 - 5:47PM
I have a SNT written up by a local lawyer here in a small town and he didn't write what I wanted. I have made some changes and need someone to check it and see what I need to have it properly written. I would prefer someone near Nashville or southern Ky. He charged about $14,500 and I told him enough already. Several million dollars are involved. Thanks
Submitted by on Nov 23, 2010 - 10:35AM
Hello thanks fo your question. LegalZoom currently does not offer a service to review SNT documents, however we can help you find an attorney in your area to assist you. Check out our attorney referral network: http://attorneyconnect.legalzoom.com
Submitted by on Jan 27, 2011 - 1:43PM
My girl friend is schizophrenic and is 100% disabled. She does well as long as she stays on her medication and is aware of that. I would like to provide something for her future that will not affect her disability check. Amoung what I could give her is my home and its content, a small life insurance poilicy. She is 49 years old, I amm 82 years old. Question is who could possibility be the trustee?
Submitted by on Dec 1, 2011 - 11:18AM
I HAVE VERY SIMILAR CIRCUMSTANCES. PLEAS LET ME KNOW IF YOU GET ANY REASONABLE ANSWERS TO YOUR PROBLEM
THANKS
KEN
Submitted by on Mar 12, 2011 - 4:02AM
How would I locate a lawyer in my area that is familiar with special needs trusts? I have two adult children and one is special needs. I have a will but worry that if for some reason my husband and I pass, assets left to my children may affect our special needs childs soc security benefits. I feel we probably need an attorney since this may be considered a complicated trust......?
Submitted by on Apr 14, 2011 - 10:28AM
Hi Cathy, thanks so much for thinking of LegalZoom. We might be able to help you find an attorney within our network to assist you with a special needs trust! Please visit http://attorneyconnect.legalzoom.com to find an attorney for a special needs trust.
Submitted by on Apr 26, 2010 - 3:27PM
Can a living trust be changed into a will? and what happens to the funded properties in the living trust?
Submitted by on Feb 23, 2011 - 4:27PM
If I put my home into a living trust will my son get the stepped up value of the home for tax purposes upon my death?
Submitted by on Mar 4, 2011 - 1:09PM
Hi, thanks so much for your question. While LegalZoom can make it easy for you to prepare a Living Trust, we are unable to provide any information regarding tax implications. If you would like assistance on this matter, we can help you find an attorney to answer these questions. Please feel free to check out: http://attorneyconnect.legalzoom.com
Submitted by on Apr 27, 2010 - 4:41PM
Does Florida pass as an expedited form of probate and what is the threshold for an estate in Florida?
Submitted by on Jun 11, 2010 - 11:23AM
"A living trust is more expensive to set up than a typical will because it must be actively managed after it is created"
What active management needs to be done? How much do these continual fees run? And finally, can't i actively manage it myself?
Submitted by on Sep 10, 2010 - 6:52PM
Most people don't put any money into a Special Needs Trust until they are gone. As a result, the most common way to fund it is with Life Insurance. You should not really need to put money into a Special Needs Trust until you can no longer take care of the Special Needs person yourself. If you have any more specific questions I can refer you to an attorney who has done these since the mid 1990's. I am not sure what states he is licensed to practice besides Ohio and Indiana; however, I can ask.
Submitted by on Oct 26, 2010 - 9:54AM
I live in Indiana. I am receiving Social Security Disability. My Father is 83 and if his assets stay the same. I will receive between $35,000 and $40,000 from his estate. Should I have him set up a Special Needs Trust or is there a better way for me not to lose any of my Benefits, ie, Food Stamps, Madicaid, and any other benefits Thank you
Submitted by on Apr 8, 2011 - 10:47PM
How do i go setting my mom up to get help 24/7 care at home with only $1600.00 a month.Right now she is in a hospital and the Dr.will not let her go home without 24/7 care. Can she get madicaid or madicare help with the bills?Will she have to give up her home and her banks and like live on the streets?
Thanks
Sharon
Submitted by on May 3, 2011 - 8:17AM
Hi Sharon. Thanks for your question. While LegalZoom makes creating legal documents easy and afforadble, we can't give specific legal advice about getting 24/7 care at home through Medicaid or Medicare. Feel free to contact our Attorney Services Department at http://attorneyconnect.legalzoom.com/ to search for an affordable attorney in your area to assist and advise you on this situation.
Submitted by on Oct 10, 2011 - 7:32AM
A reputable Financial Advisor can help to walk you with your predicament
Submitted by on Feb 20, 2011 - 9:11PM
Does anyone know whether a third-party settled Special Needs Trust is immune to attack from creditors? I'm thinking particularly of debt incurred through child support, and government-sponsored student loans.
Thank you.
Submitted by on Mar 3, 2011 - 12:20PM
Hello,
My son is only 6 so it might be too early to start a Special Needs Trust; however, I am going through a divorce and do not know what all needs to be included in the settlement regarding my son and my attorney does not seem to know either. We live in Georgia but the basics should cross over to our state. Do you know anyone that could help? I am running out of money with my attorney.
Submitted by on Mar 10, 2011 - 6:25PM
If we have a second to die policy with the money to go to our handicapped son, should we set up the special needs trust now or put it in our will that a special needs trust be set up after we die. He has sisters that are all willing to care for him in the event that he outlives us. Would it be a better idea to set it up so that whoever has him gets a certain amount of money per month or just have it in a lump sum with someone (an attorney or financial advisor) in charge?
Submitted by on Apr 14, 2011 - 10:26AM
Hello thanks so much for contacting LegalZoom. Unfortunately at this time we do not offer a Special Needs trust, and we are not able to advise you on how to create one. However, we might be able help you locate an attorney that may be able to assist you. Please feel free to refer http://attorneyconnect.legalzoom.com.
Submitted by on Jan 23, 2011 - 10:13AM
As asked, what management must be done and can we do it ourselves?
Submitted by on Jun 22, 2010 - 8:51PM
Is it better to have a will prepared together or seperately?
Please provide the pro's & con's if you will please. Since we have a house & money together, how would it be best?
I understand that Legal Zoom only provides seperate wills.
Thank You~~~
Submitted by on Jun 25, 2010 - 4:37PM
Hi Donna, this is a great question and we would be glad to give you the pro's and con's on creating separate Wills. Give us a call (1-800-773-0888, 7am-6pm PST, M-F) or send us an email (psinfo@legalzoom.com) so we may best assist you!
Submitted by on Jun 25, 2010 - 6:44AM
If the bulk of your estate is in a 401k, annuities that are not available until 59.5 y/o and in real estate(current home), is it worth doing a trust.
Submitted by on Jun 25, 2010 - 4:48PM
Thanks for your inquiry. While LegalZoom can assist you with creating a Living Trust (http://www.legalzoom.com/living-trusts/living-trusts-overview.html), we are not a law firm thus cannot advise you on whether you should or should not create one. However, you can speak with an attorney to for more legal guidance. Check out our attorney referral network: http://attorneyconnect.legalzoom.com
Submitted by on Jul 21, 2010 - 10:59AM
Hi Al, that's a great question! If you'd like to give us a call (1-800-773-0888, 7am-6pm PST, M-F) or send us an email (psinfo@legalzoom.com) we'd be happy to help with your questions.
Submitted by on Jul 26, 2010 - 2:17PM
Do you have a form to make an amendment to an existing living trust?
Submitted by on Jan 17, 2011 - 2:15PM
Do you have an amendment form for an existing living trust?
Submitted by on Jan 28, 2011 - 5:31PM
Hi George, thanks for your inquiry. Because LegalZoom is not a law firm, we cannot amend documents not initally created through us. However, we do make it easy and affordable to you prepare a brand new Living Trust. Give us a call (1-800-773-0888, 7am-6pm PST, M-F) or send us an email (psinfo@legalzoom.com) if you have questions. Or get started right away at: http://www.legalzoom.com/living-trusts/living-trusts-overview.html
Submitted by on Jul 27, 2010 - 8:24AM
Do you have any comments on the new tax laws going into effect in 2011, & how that effects current estate plans?
Submitted by on Jul 29, 2010 - 12:38PM
Hello, you raised a really great question especially because these upcoming tax laws are still uncertain. But know that LegalZoom is not a law firm thus cannot offer advice regarding these laws. However, an attorney may be able to give you more insight on the matter. Please refer to http://attorneyconnect.legalzoom.com.
Submitted by on Aug 28, 2010 - 11:09AM
Do you have a form to make an amendment to an existing living trust?
Submitted by on Sep 3, 2010 - 3:15PM
Hi Rick, LegalZoom at this time does not offer forms to amend an existing Trust. However, we can help you prepare a new Living Trust if you are interested. Give us a call (1-800-773-0888, 7am-6pm PST, M-F) or send us an email (psinfo@legalzoom.com) if you have questions. Or get started right away at: http://www.legalzoom.com/living-trusts/living-trusts-overview.html
Submitted by on Mar 2, 2011 - 4:10PM
I am age 65, married, and recently retired; my wife is still working. We have six children all of whom are grown and independent. Our assets are our home $400k which is in joint tenancy, IRAs (mine $400k and hers $300k)and all are set up with the desired beneficaries). We have a will for the remaining personal assets and such. Do you think we need a living trust? Under what circumstances would a LT become necessary? Thanks
Submitted by on Mar 4, 2011 - 5:12PM
Hi Tim, thanks for your questions. LegalZoom can certainly make it easy for you to prepare a Living Trust. Give us a call (1-800-773-0888, 6am-7pm PST, M-F) for more information about our Living Trust services. With that said, because we are not a law firm, we are not able to give legal advice regarding your specific situation or guide you to take any particular action. An attorney might be able to advise you on what's best for you, though. If you are interested in finding an attorney, please refer to our attorney referral network: http://attorneyconnect.legalzoom.com
Submitted by on Mar 29, 2011 - 12:10PM
How long should (or must )one keep financial or other business records?
Submitted by on Apr 22, 2011 - 11:19PM
I'm interested in setting up a will/trust so that a charity is my beneficiary. How can this be done? Also, would you recommend a will or a trust?
Submitted by on May 4, 2011 - 1:14PM
Hello thanks so much for contacting LegalZoom! As we are not a law firm, we can't advise you which document to prepare. However, we can certainly help with both Wills and Living Trusts. Give us a call (1-800-773-0888, 6am-7pm PST, M-F) or send us an email (psinfo@legalzoom.com) if you have questions. Or get started right away at: http://www.legalzoom.com/legal-wills/wills-overview.html
Submitted by on May 26, 2011 - 4:35PM
How would I locate a lawyer in my area that is familiar with living trusts and will trusts? I have two adult children. I live at San Juan Puerto Rico and have a few assets. How long will take (aprox) to prepare all documents?
Submitted by on Jun 22, 2011 - 6:50AM
Hi, thanks so much for contacting LegalZoom. We unfortunately do not have documents servicing Puerto Rico at this time. However, you can get free legal advice on the LegalZoom Facebook page every Friday. Check out Free Joe Friday: http://zoo.mn/FreeJoe.
Submitted by on Aug 31, 2011 - 11:46AM
I'm a single parent of one adult female child. Her mother is deceased and we were never married.My "estate" (which I consider small and basic) consists of about 200K in an IRA, 20K cash in the bank, a condominium with 150K left in mortgage principal with barely any equity (housing bubble problem!!), and half ownership in a paid off recreational property worth about 35K to me. My desire is to simply give my daughter everything at the time of my death. Obvious question here: Will or Living Trust? Thanks for any reply. I hope this was a correct usage of this forum.
Submitted by on Oct 10, 2011 - 7:36AM
Living trust is best - Otherwise the court system could tie up "all the money" up to 18 months and require 4% of the value for a probatre hearing.
You should also look into getting life insurance, if you don't have any
Submitted by on Dec 25, 2011 - 11:11AM
I want to put my share of a house I co-own in a trust fund for my Brother so if I die my share becomes his share upon my death. Please advise.
Submitted by on Feb 1, 2012 - 4:30PM
WOULD LIKE TO TRANSFER ALL MY ASSETS TO GRANDAUGHTER, BUT STILL LIVE IN MY HOUSE. IS THIS POSSIBLE...AND IF SO CAN THEE IRS SEIZE THE PROPERTY IF I ONLY HAVE A LIFE ESTATE INTEREST IN IT.
Submitted by on Feb 22, 2012 - 8:51AM
Hi Lady Di! Thanks for contacting LegalZoom. While we offer a number of Estate Planning documents, we cannot direct you to purchase one document over the other because we are not a law firm. You may wish to visit https://www.legalzoom.com/wills-estate-planning/summary-compare-wills.html to compare our documents, or you can get free legal advice on the LegalZoom Facebook page every Friday and Tuesday. Check out Free Joe: http://zoo.mn/FreeJoe.
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