Should you use a will or a revocable trust? Most want to use a revocable trust because it can provide instructions for their trusted person (the trustee) to follow during their life if they are incapable of effectively managing their affairs and on their passing.
With a revocable trust, the court does not need to be actively involved in supervising the trustee. This streamlines the process and reduces costs and fees substantially.
Why? Because there is no fee due to the Beaufort County Treasurer based on the value of your probate assets. Why? Because there are no probate assets.
Second, should assets be left to loved ones “in trust” or “free of trust”? What is the difference?
Leaving assets to loved ones “free of trust” makes it so they inherit the assets, but the assets they inherit will be subject to lawsuits, estate taxes, and loss to in-laws.
On the other hand, leaving assets to loved ones “in trust” can make it so the loved one can use the assets, can spend the assets, but if they get sued, the assets are protected.
You see, if we insert a clause in the trust that directs the right a beneficiary has to the income or principal is not subject to lawsuits, then the assets will not be subject to lawsuits.
There are two exception creditors: the IRS and if the person owes child support. Leaving assets “in trust” also allows you to direct that when your loved one passes, it stays in the family.
For instance, Mom leaves assets to her son in trust for his benefit. During his life, the son is the trustee and the beneficiary. He can distribute to himself income and principal for his needs.
On his passing what is left goes to his kids. If they are under 30 at the time, their share can be held in trust for their education, etc. This kind of planning is very powerful and effective if you want to avoid unnecessary costs, problems, and make sure your assets stay in your family bloodline.
Most informed people choose to use a revocable trust instead of a will, and opt to leave assets to loved ones “in trust” instead of free of trust. There are many considerations, and every case is unique.
The advice and counsel of a well-experienced and qualified estate-planning lawyer will go a long way to ensuring all your goals will be achieved.
Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate planning and elder law attorney. www.mwinnesq.com