Trust or Will

[Teresa in MO]

As most of you know, my dh passed away suddenly two weeks ago.  The support on this board has meant everything to me.  There are so many details I need to take care of,  I need to update my will.  My lawyer strongly advises that I do a trust instead of a will. He said most people do trust now a days instead of  a will. I'm just not sure though.  I little background info, I have two minor children at this point, ages 13 and 16.  There are some assets, but not a huge amount.  So, I guess my questions is what do most people do, trust or will?

[medawyn]

I would never consider a trust INSTEAD of a will. You can (and maybe should, depending on your personal situation) do both. Is this an estate lawyer?

[Teresa in MO]

I would never consider a trust INSTEAD of a will. You can (and maybe should, depending on your personal situation) do both. Is this an estate lawyer?

Yes, he is an estate lawyer.  There will be what is called a "pour-over" will also.

[Ravin]

Did the lawyer explain WHY he thinks a trust would be preferable?

[Butter]

NO!!!! (Unless you are very rich.  Then, yes.)

 

My uncle died in 2014.  He had a trust instead of a will.  It's not done being dealt with.  My mom is the executor.  It's been a mess.  The lawyer who has been helping them nearly cried when he saw what had been done.  He had been casual friends with my uncle.  Estate lawyers sometimes will try to get people to do a trust instead of a will because it is worth more to them.  I wouldn't wish the experience my mom has had on anyone.  Most people do wills not trusts (again, unless they are very rich... then a trust makes more sense).

[Um_2_4]

We have both. Some depends on the state you live in. But because we have minor children AND own property, we have the trust. Before we owned any property we just had wills. I would get a second opinion if needed.

I am not sure custody issues would be spelled out in a trust iykwim.

[Ravin]

The advantages and disadvantages of each and why he thinks the trust would be preferable is something your lawyer should explain to you.

[Ellie]

I have very limited experience with trusts (or wills, for that matter), but two out of two people that I know experienced living hell because there were trusts instead of wills.

 

ITA with getting a second opinion.

[madteaparty]

I'm not an estate attorney--but in our case I have gone against the standard advice and have not put our assets (such as they are ;)), in a revocable trust as is recommended (over and over) to me. I have personal reasons for this which may or may not apply to someone with older, adult children (and I may yet revisit when DS is of age).

 

The main thing in my opinion for those of us without complicated assets is that  if your assets are liquid to fill out the "pay/transfer on death" and designate a beneficiary. My view is, you want to stay out of court as much as possible.

Edited September 21, 2016 by madteaparty

[OneStepAtATime]

1. Ask your estate lawyer to write down and clearly spell out EXACTLY why, point for point, they feel a trust is better than a will for your specific situation.

2.  Get a second opinion.

 

The decisions you make right now could have serious ramifications for your kids.  There ARE times when having specific types of trusts can make a lot of sense.  There are times when it is a truly lousy idea.  Don't sign anything until you have done some extensive research on your particular situation (including the state that you live in).

 

:grouphug:  :grouphug:  :grouphug:

[prairiewindmomma]

I agree that this is a question best for you and your attorney to discuss.  Have you already decided, should you die with minor children still at home, who will act as guardian for them? Do you want that same person controlling the funds you leave behind to care for minor children? How do you want your assets divided? What are the tax implications for your decisions? What are the administrative costs/responsibilities for having a trust?

 

I have had friends do one, the other, or both and live out those choices.  Trusts haven't been problematic here, in many ways, they shielded funds from being spent inappropriately by the surviving spouse/new marriage partner.  Your situation is different, however, which is why I advise you to meet with a tax consultant as well as an attorney. :)

[ChocolateReignRemix]

The advantages and disadvantages of each and why he thinks the trust would be preferable is something your lawyer should explain to you.

 

^^^^This.

 

There can be very good reasons to have a trust, and those will need to be based on more information than you can/should share here.

[MomatHWTK]

For some estate planners, the "trust" instead is a really big sell point. I never totally understood why. I think it is useful for wealthy clients and for others--may it is just the document the attorney has on hand and wants to use. 

 

 

I'm so sorry for your loss and can understand how frustrating it must be to have to think about all this now. We just rewrote our wills this spring. So here are my tips based on that process:

 

• A will that leaves everything in trust for the children until they reach X age.
  • For our will/trust funds are to be split based on a specific formula and distributed into four separate trusts. Each child gets a set amount based on age/needs. (Tough decisions there!) 
  • We set a pretty late full distribution date, maybe age 30? (after college)
• A declaration of who will be guardian for the children and who will be  trustee for the $. Go at least two deep appointing people if you can.
  • It is fine to appoint a bank if you don't have anyone you trust with the $. Or, use co-trustees who both have to sign off. If you really trust someone, they can be both guardian and trustee. If not, split the job or name a relative for guardian but bank for trustee. 
  • Most trusts are boilerplate (all the same) if there is something specific you need for the kids- add a provision. For instance, we needed to make sure that the trustee would hang onto the family home for our ASD child even if it didn't make financial sense. We also indicated that funds did not have to be spent for college only. Our kids may choose a different path and we are willing to support that.

It is easiest for an attorney to give everyone the exact same document and just switch out names. Usually this is fine. Because I knew a bit about the field and knew I had specific needs, I went a bit deeper. (But that also cost me $).

 

I would say ask for a standard will with a trust.  Name your guardians and decide if you want two trusts- one for each child or one common pot.  :grouphug:

 

 

[nevergiveup]

I have heard Suze Ortman say that everyone needs a living revocable trust.

Everything stays in your control until you die then is passed directly on to the heirs thus avoiding probate and the potentially large probate costs.

Wills can take a long time to clear probate, too, and sometimes there are bills that need to be paid, etc. and it is nice having access to the bank accounts in order to pay them.

One must be sure to list EVERYTHING specifically that will be in the trust.

That is why some people opt to have a will also--to cover things they may not have stated.

I am not a lawyer.

[Scarlett]

I think the main thing is to know exactly what your attorney is talking about.  My apologies to the attorneys on this board, but my opinion of them is fairly negative ATM.  Or maybe it is the system in general.  I don't know....

 

I would keep it as simple as possible and not worry about all the 'what ifs' that could happen once you are gone.  The main thing is guardians for your minor children and they will be grown before you know it.  Also, since you have grown children I imagine one of them would take on the minors.

 

 

[madteaparty]

I have heard Suze Ortman say that everyone needs a living revocable trust.

Everything stays in your control until you die then is passed directly on to the heirs thus avoiding probate and the potentially large probate costs.

Wills can take a long time to clear probate, too, and sometimes there are bills that need to be paid, etc. and it is nice having access to the bank accounts in order to pay them.

One must be sure to list EVERYTHING specifically that will be in the trust.

That is why some people opt to have a will also--to cover things they may not have stated.

I am not a lawyer.

 

You would have access to cash from bank accounts if those accounts had a "Transfer on death" designation and one was the designated beneficiary.  I imagine getting $$ out of the trust is not instantaneous either.

Same with life insurance proceeds--these things do not go through probate, or the trust mechanism (unless you make the trust the beneficiary of the policy).

 

ETA that a lot of this is about personal preferences. I do not understand, for example, why people split who is managing the $ versus who has guardianship. The guardians are good enough to raise my kids, but can't be trusted with my measly $$?

 

 

(again, I am not an estate attorney. I also do not play one on TV :))

Edited September 21, 2016 by madteaparty

[Mrs_JWM]

We've had two family members with trusts that caused huge issues. In one case, the only people who did well were the lawyers and the investment banker...while the family member whom the trust was supposed to benefit lived in poverty. Truly.

 

Definitely agree with getting everything laid out by the attorney as to why he thinks you should do this AND get a second opinion.

 

Sent from my XT1049 using Tapatalk

[ChocolateReignRemix]

 

 

ETA that a lot of this is about personal preferences. I do not understand, for example, why people split who is managing the $ versus who has guardianship. The guardians are good enough to raise my kids, but can't be trusted with my measly $$?

 

 

(again, I am not an estate attorney. I also do not play one on TV :))

 

It is just an extra level of protection, as circumstances can change greatly over time. Designating a manager of a trust who is not a guardian also occurs frequently when leaving money to a minor who is not your own child (grandkids, nieces, nephews, etc). 

[Scarlett]

You would have access to cash from bank accounts if those accounts had a "Transfer on death" designation and one was the designated beneficiary.  I imagine getting $$ out of the trust is not instantaneous either.

Same with life insurance proceeds--these things do not go through probate, or the trust mechanism (unless you make the trust the beneficiary of the policy).

 

ETA that a lot of this is about personal preferences. I do not understand, for example, why people split who is managing the $ versus who has guardianship. The guardians are good enough to raise my kids, but can't be trusted with my measly $$?

 

 

(again, I am not an estate attorney. I also do not play one on TV :))

 

 

I agree if someone is good enough for me to ask them to raise my child they should be good enough for handling the money....but I guess some people aren't very good with money....who knows.

 

Plus in my case, I would have no say....ds would have to go to his dad.....so I prefer to have my parents dole out the money.

[madteaparty]

 

 

Plus in my case, I would have no say....ds would have to go to his dad.....so I prefer to have my parents dole out the money.

 

That is a scenario where my rhetorical question makes no sense, you are right. Thanks

[Ravin]

I think the main thing is to know exactly what your attorney is talking about.  My apologies to the attorneys on this board, but my opinion of them is fairly negative ATM.  Or maybe it is the system in general.  I don't know....

 

I would keep it as simple as possible and not worry about all the 'what ifs' that could happen once you are gone.  The main thing is guardians for your minor children and they will be grown before you know it.  Also, since you have grown children I imagine one of them would take on the minors.

 

Poor communication is the #1 bar complaint, at least in my state.

 

You do need to make sure the attorney takes the time to explain everything to you, including the costs of each in attorney fees, and by all means get a second opinion. 

[Ravin]

I agree if someone is good enough for me to ask them to raise my child they should be good enough for handling the money....but I guess some people aren't very good with money....who knows.

 

Plus in my case, I would have no say....ds would have to go to his dad.....so I prefer to have my parents dole out the money.

 

From family experience, my MIL blew through my BIL's inheritance from his father and uncle (his parents were divorced), including selling the house he inherited to pay off her home after he had turned 18 and was not living with her. He had to drop out of college because she blew through all his money and he's not the sort of person who will sue his own mother, so he was basically just SOL.

 

There are circumstances where you might want different people managing your children's money and providing for their day to day care. 

[Butter]

I have heard Suze Ortman say that everyone needs a living revocable trust.

Everything stays in your control until you die then is passed directly on to the heirs thus avoiding probate and the potentially large probate costs.

 

That's not how it ended up with my uncle at all.  The lawyer my parents used was so upset and said if it had been a simple will, they'd have walked across the street to the courthouse, signed a few things, done.  Instead, 2 1/2 years later things aren't done and it's cost SO much money.  It's crazy.

 

Interestingly, the only thing that went quickly and easily was the inheritance for myself and my brother and sister.  He had neglected to put it inside the trust (thank goodness) so the money was disbursed (it was an IRA with us as beneficiaries) within a couple months.  If it had been inside the trust we actually would have gotten less money apparently.

[regentrude]

 I do not understand, for example, why people split who is managing the $ versus who has guardianship. The guardians are good enough to raise my kids, but can't be trusted with my measly $$

 

 

You want to avoid any conflict of interest. The person handling the money should have no personal financial interests in its disbursement and solely have the minor's interest in mind. It is very difficult for the guardians to completely disregard how financial decisions about minors affect the guardians themselves. 

It is always prudent to separate the two things, even if you completely trust the guardian to raise your kids. It is also in the guardians' best interest so that they are not put in the difficult position where they have to weigh the child's financial well being vs their own - the two should not have to mix.

Edited September 21, 2016 by regentrude

[Guest]

What a headache :(. I agree wills are more straightforward unless you have a compelling reason for a trust, and I'd ask the lawyer to lay out, in writing, his specific pro and con list for each as it pertains to YOU.

[madteaparty]

You want to avoid any conflict of interest. The person handling the money should have no personal financial interests in its disbursement and solely have the minor's interest in mind. It is very difficult for the guardians to completely disregard how financial decisions about minors affect the guardians themselves. 

It is always prudent to separate the two things, even if you completely trust the guardian to raise your kids. It is also in the guardians' best interest so that they are not put in the difficult position where they have to weigh the child's financial well being vs their own - the two should not have to mix.

 

Interesting. I could not disagree more, other than the scenarios where one has no control where the child is going as mentioned above. If the guardians will take care of my children, I absolutely want them to take care of themselves, as well.

 

Which circles back to the point  that this sort of practice of law is very "personal fact"-specific and template agreements should not apply.

 

OP, I would approach the attorney with the specific scenario that you want to take place, and ask some follow-on questions, such as the fees for establishing a trust, any ongoing fees, who will maintain and administer such trust etc.

Edited September 21, 2016 by madteaparty

[Guest]

Teresa, we have had a family revocable trust in the past because our financial situation was complicated and we had a minor child, so we had guardians and trustees assigned.  That said, we also had *wills*--it wasn't "either-or" but "both-and."  We are now deciding whether to undo the trust or to revise it, now that our son is of age.  If my dh and i were both to die at the same time, I think it would be a very bad thing for my son to inherit everything right now; that is why I am thinking about what we should do.  

 

The trust can be very simple; ours was not--that is part of what we are having to undo.  Our house, cars, all things of value were held by the trust, which is OK but it makes selling houses, cars, things of value a PITB.  

 

Here is probably the only thing I have to say on this entire post that has any value at all:  You are at an extremely vulnerable time, and one where it would be completely ridiculous for anyone to be expecting you to be firing on all cylinders.  You are most certainly a capable person--but you are doing something that you have never had to do before, and will likely never have to do again.  Here is my recommendation:  If you have a friend or a family member you can trust, ask this person to go to these meetings with you, and ask the questions you only think of later (because you are still in turmoil, and you will be for awhile).  They will be able to take notes, to be a bit arm's length, to ask hard questions on your behalf.  And two memories of what has occurred are better than one.  When it comes time to explain to the kids what the plan is (which might be 10 years from now), that person can be of help as well.  

 

God be with you.  I'm walking a friend through her new widowhood and it is a very hard time.  Take the help you can get from those who love you and want to stand with you.  Someone will be perfect for this particular job.  

[ChocolateReignRemix]

You want to avoid any conflict of interest. The person handling the money should have no personal financial interests in its disbursement and solely have the minor's interest in mind. It is very difficult for the guardians to completely disregard how financial decisions about minors affect the guardians themselves. 

It is always prudent to separate the two things, even if you completely trust the guardian to raise your kids. It is also in the guardians' best interest so that they are not put in the difficult position where they have to weigh the child's financial well being vs their own - the two should not have to mix.

 

I agree with the bolded, but it also helps the guardian as there is no appearance of impropriety when decisions are made.

[ChocolateReignRemix]

Teresa, we have had a family revocable trust in the past because our financial situation was complicated and we had a minor child, so we had guardians and trustees assigned.  That said, we also had *wills*--it wasn't "either-or" but "both-and."  We are now deciding whether to undo the trust or to revise it, now that our son is of age.  If my dh and i were both to die at the same time, I think it would be a very bad thing for my son to inherit everything right now; that is why I am thinking about what we should do.  

 

The trust can be very simple; ours was not--that is part of what we are having to undo.  Our house, cars, all things of value were held by the trust, which is OK but it makes selling houses, cars, things of value a PITB.  

 

Here is probably the only thing I have to say on this entire post that has any value at all:  You are at an extremely vulnerable time, and one where it would be completely ridiculous for anyone to be expecting you to be firing on all cylinders.  You are most certainly a capable person--but you are doing something that you have never had to do before, and will likely never have to do again.  Here is my recommendation:  If you have a friend or a family member you can trust, ask this person to go to these meetings with you, and ask the questions you only think of later (because you are still in turmoil, and you will be for awhile).  They will be able to take notes, to be a bit arm's length, to ask hard questions on your behalf.  And two memories of what has occurred are better than one.  When it comes time to explain to the kids what the plan is (which might be 10 years from now), that person can be of help as well.  

 

God be with you.  I'm walking a friend through her new widowhood and it is a very hard time.  Take the help you can get from those who love you and want to stand with you.  Someone will be perfect for this particular job.  

 

Excellent advice.

[Scarlett]

I agree that a trusted friend would be a big help right now. Maybe even one of the grown children depending on the relationship.

 

 

[Seasider]

The way I understand it - and I confess to a limited understanding! - is that with a trust, the funds remain within the generation of your own children, should one precede you in death, the funds wouldn't pass to the grandchildren of the deceased, but would be distributed among the surviving original children. At least that's how a trust worked with one of my elderly relatives. 

 

A trust is also a form of excluded asset when it comes to a medicaid application (which you might need if you need to go into some form of assisted living). However, one must initiate the trust more than 5 years prior to making a medicaid application. Perhaps that's why your attorney recommended a trust?

 

I would be sure to ask a million questions pertinent to your precise circumstances. I would think that in addition to a will, you may wish to choose a very trusted friend or family member and prepare a power of attorney document to enable someone to make decisions and take care of business should you become incapacitated for any reason. Many people prepare wills, and I know that you are still reeling from your dear one's sudden death, but the truth is that more people these days live with prolonged poor health than experience sudden death. So, it's good to have someone lined up as your agent should such become necessary.

 

You and your family remain in my prayers. You are really amazing, to already be taking proactive steps to plan for the future. May the Lord hold you close and give you His peace.

:grouphug:

[gardenmom5]

trust - by someone who KNOWS what they're doing.  (which may or may not be your current lawyer. regardless of whether he is an estate lawyer.  I've met too many who aren't very good.  that includes the wills and trusts they put out can be woefully inadequate.  this is something it pays off in the long run to get a *very good* lawyer.  even if you don't have a lot of money.  my mother didn't.)

 

dh said the reason to use a trust vs will.  wills go through probate (and lawyers and courts can take an exceptionally large cut) - trusts don't.   trusts can be files IN ANY STATE.  it does NOT matter what state you live in (though each state has specific trust rules, you do not have to live in that state to file there.  our's is not in our own state.  if you want a dynasty trust - alaska is an option.)

 

we put my mom into a trust 2 1/2 years before she died. and two years before her physical and mental health went downhill so there were no questions this was what she wanted.   (so, we've gone through the whole gamut from implementing to dispersal to having to wait three years to completely close-it-out because my brother kept threatening to sue us, including having others send threatening letters.  if he did, we held back enough assessts to pay a lawyer.  we were much better off she was in a trust than had she only had a will.)

 

it did make things much easier - as it also dictates things while the person is still alive but unable to speak for themselves.  for starters - like who they want to be in charge of them (and their money) while they're alive . . . (my brother made things excruciatingly difficult as he wanted control but it was clear in her trust  she wanted me in charge; the hospital was ready to throw him off their property - at their instigation - on my say so. the hospital had copies of pertinent pages so that they would listen to me at medically critical times over course of treatment. - as opposed to trying to get the whole family in agreement.)

 

eta: dispersal of funds after death.  after bills are paid, assets are distributed as the trustee wishes and has previously stipulated within the trust in the section that pertains to dispersion of assets.

it does require a trustee - which can be a trusted family member.  my mother named my dh, because of his financial background and trustworthiness.

 

generally an executor/trustee receives a percentage of the estate. . . . we didn't do that, but I would recommend you include that in the papers that after your death, the trustee will receive a percent.  it's usually small, but don't underestimate the amount of time it can require. (and in our case, mental stress of dealing with my brother.  I was doing it to care for my mom, I didn't care about the money.  in the end I was glad she was dead because my brother couldn't get to her anymore.  I hope that says a lot about him.)

 

eta: we waited three years for the statute of limitations to expire to close it out because my brother was threatening to sue us.  (an equal share to myself and our sister wasn't enough for him.)  otherwise, it would have been closed within a couple months of my mother's death.

 

 

Edited September 21, 2016 by gardenmom5

[Acadie]

We have a will and a trust. Laws changed within the past few years in my state to make it much easier and more advantageous for families to create a trust. 

 

Most of our assets, bank account, and life insurance, etc are either owned by the trust, revert to the trust when we die, or have the trust listed as a beneficiary (this does include our house, but not our car--that really would be a hassle). This will make the job of the executor and trustee much simpler. Another selling point to me is that the funds are protected from bankruptcy and from divorce settlements, as long as they stay in the trust. Having seen two of my sisters go through very difficult divorces that were financially disastrous, I like the idea that my daughters' inheritance can remain theirs. After a certain age they become their own trustees and can withdraw funds for any purpose, but whatever remains in the trust will be protected.

 

State laws vary quite a bit. I think it's a good idea to think about whether you have a trusted friend or relative to consult or accompany you to see your lawyer. Also, I would imagine that you can get a second or third opinion. Getting the perspective of different lawyers could really help you learn more about it and gain confidence in your decision.

 

Amy

[Luckymama]

^^^ I'll just second everything Amy just said.

 

We have both wills and a trust. We still have one minor child.

[gardenmom5]

we had previously had wills. dh (who has a year of law school.) spent several years speaking with estate lawyers BEFORE he found a lawyer in whom he had confidence.

I never, ever, would have thought my brother would act the way he did, but my mother being in a trust was a saving grace (before and after her death).  it really would have been closed out in very short order - except for my brother's threats.

 

eta: and the trust really does have to be set-up.  there should also be a provision for items that have not yet been placed into the trust.

Edited September 21, 2016 by gardenmom5

[MotherGoose]

Our attorney helped us set it up so there is a will, and if there are minor children when we die, the money goes into a trust for them. That's the goal, right, to make sure sweet 16 year old doesn't suddenly get loads of money at once and so that whomever takes care of her (I'm not even sure how old ur kids are, just saying 16) has money to use? With parameters to say things like you cannot buy her a $40k sports car when she gets her drivers license, and etc.?

[Guest]

Our attorney helped us set it up so there is a will, and if there are minor children when we die, the money goes into a trust for them. That's the goal, right, to make sure sweet 16 year old doesn't suddenly get loads of money at once and so that whomever takes care of her (I'm not even sure how old ur kids are, just saying 16) has money to use? With parameters to say things like you cannot buy her a $40k sports car when she gets her drivers license, and etc.?

 

A lawyer I know told us that his/his wife's trust for their children has parameters that involve--

1)  three stage distribution of assets, one at 25 or completion of bachelor's degree; one at 35 and one at 45; and,

2)  instructions to the trustees as to what kinds of things they should feel more than great about distributing assets outside of these time frames:  education, for any degree program; great travel or experience opportunities; down-payment for a first house; a specifically limited amount for wedding/honeymoon expenses.  These are things that the parents would have supported had they lived (in theory, the trust is for after their death so I'm getting all my tenses mixed up...)

3) latitude for the trustees to use their judgment.  

 

And choose the trustees well.  :0)

[Janeway]

We have both. We put everything possible in the trust, but the will handles what is left over.