Yes, you will likely invest more in trust-based planning than will-based planning because you get a whole lot more value. Comparing these estate planning investments is like comparing apples and oranges – and the overall investment may not be what you think.
- A living trust document has more provisions than a will because it protects you and your loved ones while you are alive and well, while you are alive and not-so well, and after your death. A will only handles matters after death.
- A properly prepared and funded living trust will avoid court proceedings at incapacity and death. A will provides no such protection and ensures court interference at both events, which can be very costly (in time, privacy, dollars, and stress) to your family.
Instructions at Death and Incapacity
- Both a will and a living trust contain instructions for distributing your assets after you die.
- But only a living trust contains your instructions for managing your assets and your care and providing for your loved ones should you become incapacitated.
A Living Trust Avoids the Costs of Court Interference at Incapacity and Death
- A properly prepared and funded living trust (one that holds all of your assets) will avoid the need for a court guardianship and/or conservatorship if you become incapacitated.
- The person(s) you select will be able to manage your care and your assets privately, without court interference.
- A will is only effective after death, so it fails to provide instructions and assistance during any period of incapacity.
- If incapacity strikes, your family would almost certainly have to ask the court to establish a guardianship and/or conservatorship for your care and your assets — a process that is public, time-consuming, expensive, and stressful.
What You Need to Know
- The same living trust document that can keep you out of court at incapacity can also keep your family out of probate court when you die.
- But a will requires probate. Depending on where you live, this can be costly and time-consuming. Probate is always public and open to nosey neighbors and predators.
Costs to Transfer Assets… Pay Now or Later
- There may be some minor costs to transfer assets into your living trust when you set it up, and then from your trust to your beneficiaries after you die. But these will be minimal if you and your successor trustee do much of the work yourselves.
- With a will, the probate court (with its costs and attorney fees) is the only way to transfer your assets to your heirs after you die. So you can pay now to set up your trust, transfer titles, and benefit from the trust during your lifetime – or you can pay the courts and attorneys to transfer assets after you die.
Actions to Consider
- Find out what probate costs are where you live. If your state has a fee schedule based on the value of probate assets, this will be fairly easy. If it has “reasonable” fees, ask an attorney to estimate what these fees would be if you die tomorrow and, if you are married, and your spouse dies the next day.
- Similarly, ask your attorney to estimate what the costs would be if you become incapacitated tomorrow and, if you are married, if your spouse becomes incapacitated the next day.
- Practically speaking, this will be impossible to estimate because no one will be able to predict how long the incapacity will last or what complications might arise. The mere uncertainty of these costs should give you pause — and propel you to plan for incapacity.
- Add these estimates to the cost of having a will prepared — and compare that to the cost of a living trust. When you make a true comparison, you may conclude that having a living trust actually costs less than a will.
And what’s the cost of a plan not working and you and those you love being vulnerable, losing control, and being tied up in court? What’s the cost of your loved ones having their inheritances seized and being left with a mess? For many folks, the investment in trust-based planning is a good one.