What is the best Estate Planning option, a Will or a Trust (read this link to see the difference between a family trust and a living trust)?Although this is a very common question, it is not one that can be appropriately answered without a thorough conversation.
Often your answer to this question comes down to what I call your “Hurt Points.” When we talk about the facts of what will happen and what can happen with either a Will or a Living Trust, you typically come up with your own answer based on your “Hurt Points.”
So, the good news is you get to answer your own question, with an attorney there to guide the conversation.
If all you want to do is make sure that you can appoint who will represent your estate and that your property passes to the people you chose as your heirs, and you don’t own any real property, and your possession don’t have a value higher than $100,00, then a Will is often enough.
What are many of the hurt points that are covered during a meeting?
Cost: Upfront cost for a Family Trust is more than a Will. This is important to understand. The Living Trust costs more upfront because it is a more involved process to create an estate plan to ensure your estate avoids Probate. The “Hurt Point” is the upfront cost. The alternative is to select a Will, which costs less upfront. But, Wills are required to go through Probate. In the State of Idaho, you can expect to the cost of Probate to generally be between $2,000 and $5,000. So, although it is more expensive upfront, overall the cost of a Family Trust is less than a Will when you factor in the cost of Probate.
Avoid Probate: When is Probate necessary or when is Probate required? Without a properly funded Trust, Idaho Law requires Probate if a person owns possessions worth more than $100,000 or if a person owns any real estate (regardless of value), then Probate is required unless specific steps have been taken to avoid Probate.
Leaving Money or Property to Minor Children: A distribution to minor aged children of your assets through a Will, or if you fail to plan at all, will give those assets to them at age 18. If it bothers you to think about your kids or grandchildren receiving their share of your assets at age 18, then a Living Trust might be for you.
Asset Protection: A distribution of your assets through a Will gives devisees their inheritance immediately, without regard to their current situation. This might not be a bad outcome for many, but what about those beneficiaries that are dealing with a divorce, special needs that are currently receiving government assistance (Special Needs Trust), creditors, bankruptcy, lawsuits, long-term care costs, etc. A Family Trust can be drafted to protect your beneficiary’s inheritance in situations like this.
Reduce or Eliminate Estate Taxes: A Living Trust prepared by a lawyer or attorney allows most married couples to leave their assets free of estate taxes, or at least have the potential to limit their estate tax exposure.
So in order to determine whether a Will or a Trust will meet your needs and the needs of your family, it is important to clearly identify your estate planning goals. Contact Jeppesen Law today at 208-477-1785 to discuss your “Hurt Points” and see what your options are.