A will is one of the most well-known estate planning documents, and yes, everyone should have one. But in some cases having a trust in addition to your will is imperative to give you the protection you’re looking for.
The biggest myth about wills is that it avoids probate—not true. Here are six ways a trust is better than a will:
Avoiding probate or conservatorship. A will lands your loved ones in the middle of the probate court while a trust will bypass the probate court process, saving the people you love time and money. To carry out instructions in a will, a probate proceeding must be opened in the probate court where you resided and that means your family is stuck dealing with the probate court if you get hospitalized or after you pass away.
Providing for a person with special needs. If you have a child or another dependent with special needs, a trust commonly known as a Special Needs Trust can protect assets for a special needs person without jeopardizing their qualification for government benefits. A will allows you to transfer assets to a special needs person, but it will not protect those assets in the same way a Special Needs Trust can. This is especially critical if a special needs person is on governmental benefits because an inheritance via a will or beneficiary designation can unintentionally disqualify them.
Privacy. When a will undergoes probate, it becomes public record. A trust is private. Have you ever wondered how it is that we know who inherited from Anna Nicole Smith, Michael Jackson, Heath Ledger, and Nelson Mandela? It's because they didn't use a trust to keep their personal information private. There are tons of celebrity stories out there that attorneys Danielle and Andy Mayoras devote their practice to covering.
Blended families. If you are part of a blended family, a trust can give you the flexibility you will want to make sure that children from prior marriages are provided for in the way you want. It isn't enough to leave everything to your surviving spouse, because they can turn around and leave everything to their own children—effectively disinheriting your side of the family.
Out-of-state property. If you own property in another state besides your state of residence, you can more easily transfer ownership via a trust than a will. Transferring out-of-state property in a will means additional legal expenses because your loved one would have to open probate in multiple states.
Asset protection. If you want to protect the assets you leave for your loved ones from creditors (including your beneficiaries’ bankruptcy and divorce), a trust is the way to do it. It's a gift you can give your loved ones that they could not easily, or at all, give themselves.
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Note from the author: Probate doesn’t have to complicate things for your family and make everything public. A trust is superior to a will in many ways and may be the right choice for your family. If you want to have an estate planning “chat,” check out Wills & Wellness – we’re parents and estate planning attorneys who focus on educating families. Call us to schedule your Estate Planning Session (a $750 value) to spend up to two full hours with your attorney as you gain an understanding of the potential tax implications related to your estate. Call 720-266-8190 today and mention this article.