First, 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 Treasurer based on the value of your probate assets.
Why? Because there are no probate assets.
Second, should assets left to loved ones be left to them “in trust” or “free of trust”? Well, 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 or spend the assets, but if they get sued, the assets are protected from most creditors (exceptions: IRS and child support).
Also, leaving assets “in trust” also allows you to direct that when your child or other loved one passes, the assets they enjoyed stay in your blood family, like down to your grandkids, and not the in-law.
For instance, Mom leaves assets to son in trust for his benefit. During his life, 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 blood line.
For the above reasons, most astute people choose to use a revocable trust instead of a will and decide 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 an experienced and well-qualified estate-planning lawyer will go a long way to ensuring all your planning 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