The quick answer to the question, "Is there a one-size-fits-all estate planning tool?" is "No." Wills or Living Trusts, as estate planning tools, have advantages and disadvantages. Deciding which tool you should use depends on your goals and desires. Five of the primary considerations that should go into the decision-making process when thinking about whether a Will or a Living Trust is the proper estate planning tool for you are as follows:
Are You Concerned About Incapacity? A Will is an estate planning tool designed to be used only after your death, while a Living Trust is a tool designed to be used while you are still alive. Since a Will is designed to work only upon death, a Will offers no protection against incapacity. A good Power of Attorney for financial affairs and a Power of Attorney for healthcare will provide short-term incapacity protection, but may not prevent a future court-ordered guardianship. A Living Trust offers incapacity protection for assets titled to the Living Trust. If you are concerned about incapacity, a Living Trust can provide protection during life, whereas a Will, by its design, cannot.
Are You Concerned About How Much Work Is Involved While You Are Alive? A Will plan requires no asset maintenance after you sign it, which means you do not need to do anything for a Will to work as designed upon your death. A Living Trust plan, on the other hand, requires that the Living Trust be properly funded. Funding entails making sure assets are either owned by the Living Trust or that the Living Trust (or other individual or entity) is named as the beneficiary of such asset. Funding allows the Living Trust to perform as designed. Thus, if you want to do as little work as possible while you are alive, leaving the work for others, then a Will would meet your needs. If you want to do more work while you are alive (i.e. funding) and leave less work after you die, then a Living Trust plan would meet your needs.
Are You Concerned About How Much Work Is Involved After You Are Gone? If you have a Will, most of the work will be done by someone else after you are gone. With a Will, there will probably be a probate (and ancillary probates in other states where you have real property), so there will be more administrative work for your Personal Representative. If you chose a Living Trust as your primary estate planning tool (provided the Living Trust was properly maintained throughout your life), a probate (ancillary or otherwise) is not required. There will be less administrative work for your successor Trustee because you have already done the work during your lifetime. Additionally, if you are concerned about a beneficiary contesting your estate plan, note that a Will is easier to contest than a Living Trust. Thus, if your concern is to make the administration of your estate as simple as possible after your death, then a Living Trust would better meet your goals than a Will.
Are You Concerned About Privacy? A Will, through the probate process, is filed with the Court and becomes a public document, which means that anyone can look up the details of a Will. A Living Trust is only made public to the Trust beneficiaries, but is private to all others. Thus, if your primary concern is privacy, a Living Trust offers more privacy protection than a Will. However, keeping thinks private can only go so far as both Will and Living Trust plan do have notice requirements and beneficiaries have to be kept reasonably informed.
Are You Concerned About Costs? The cost of each estate planning tool can be broken into "Short-Term" and "Long-Term." A Will plan costs less than a Living Trust plan in the short-term. In the long-term, however, a Will, as the chosen tool for estate planning, will probably cost more because the cost of the probate should be taken into account. A Living Trust plan costs more in the short-term because of the additional cost of funding the Living Trust. A Living Trust, however, costs less in the long-term because, if it is properly funded, it does not result in any probate costs. Thus, if you are concerned about the short-term costs of estate planning, then a Will costs less. But if you are concerned about long-term costs, then a Living Trust tends to be a more cost-effective tool.
If you would like to learn more about the pros and cons of Wills and Living Trusts, please call Rehberg Law Group at (206) 246-8772 to schedule a no-cost appointment with one of our attorneys.