A Will is a legally executed document specifying who
will receive your property when you die. It is one of
two common types of documents you can create to pass your
property according to your wishes when you die. The other
is a Living Trust.
In this era of Living Trusts, it may be surprising to
you that anyone would ever consider a Will as the center
of their estate plan. After all, a Will, unlike a Living
Trust, must be probated on a person's death. Probate
necessarily involves courts and the costs associated with
them. Nevertheless, Wills are less expensive to prepare,
do not need to be funded by transferring assets, and generally
are simpler and more easily understood than Living Trusts.
In some circumstances where court supervision is desirable,
Wills offer a distinct advantage over Living Trusts.
Some Myths about Wills & Living Trusts
Myth: You must have a
Living Trust in order to save taxes when you die.
Fact: Almost all tax savings that can
be accomplished with a Living Trust can also be accomplished
with a Will containing a Testamentary Trust.
Myth: Living Trusts are private,
Wills are public.
Fact: Recent changes in the Probate
Code now require all of a person's heirs and all beneficiaries
under a trust to receive notice of the trust terms upon
your death. These persons also must receive notice of
the time period in which they can file a contest to the
trust. Because of these changes, many of the privacy benefits
of Living Trusts have been lost.
Myth: Nothing needs to be done
after you die if you have a Living Trust, but Wills must
be probated.
Fact: It is true that a Will must be
probated and that there is a cost involved in that process.
However, a Living Trust must be "settled" following
a person's death. Settling a trust is a process which
involves a series of legal steps. Properly settling a
Living Trust includes making sure that important title
documents to real property are prepared and recorded,
important tax decisions are made, tax returns are prepared,
debts are settled, legal steps are taken to extinguish
creditor rights, and distribution of the trust is properly
accomplished.
A Will may be appropriate for you if you can't afford
the cost of a Living Trust, if you don't want the time
and expense of transferring your assets to a Living Trust,
or if your beneficiaries would benefit from a court supervising
your gift when you die (such as when you are survived
by minor children).
