Will vs. Trust. What do you have and why

C50

C50

Senior Member
Location
Ohio, USA
I searched for this but count find a specific thread. If there is one please direct me there.

As the title states, which did you chose and why. I currently have a will but am thinking of going to a trust but still looking at pros and cons. Obviously my goal would be to minimize taxes and protect pass thru assets.
 

Myquest55 said:
You actually need both. You should have a "Pour Over Will" that directs your estate to be transferred into a trust. Once you have that, you should not need to file probate since everything would be covered by the trust. Consult an estate lawyer.
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Huh, never heard of a "pour over will", thanks to adding to my confusion.lol
Seriously..I will look into that, thanks
 
It really depends on how much you have and how complicated your holdings. Everything I have is TOD (Transfer on Death). with the "per stirpes"
provision. Per stirpes allows the asset to be transferred to a surviving child or children in the case the beneficiary passes before you do.
I had a complete estate plan worked up with power of attorney for health care and for financial matters. These are very important.
There was also a pour over will to take care of anything that was not TOD.
 
Trusts will NOT save on taxes. That is not the purpose of a trust. Discuss estate taxes with your tax adviser, or find one through your state's bar association.

A lawyer can set up a Revocable Living Trust for you, but it will be your responsibility to actually move those assets into the trust. Payable on Death accounts - checking/savings; IRAs/401k's - do not necessarily have to be in the trust; discuss the pros and cons with your lawyer.

Be aware that even with a trust, most banks will want you to fill out THEIR legal form.

If you have a simple estate, a will is perfectly fine. Check your state's laws; in a number of them probate is quite simple and relatively quick.

We live in CA, a state which has more lawyers than the entire nation of Japan, and therefore have a trust, LOL.

The estate attorney - you want someone who specializes in wills & trusts - will also prepare a Financial power of attorney and a Healthcare power of attorney. In the case of a trust creation, a "pour-over will" is standard procedure as it covers assets you may have neglected to add to your trust, or acquired subsequent to execution of your trust. But as noted above, substantial assets, such as homes or financial portfolios, need to be legally titled to be in your trust.

If you fail to retitle and move assets into your trust, then the pour-over will is the legal back-up to distribute your estate to your chosen beneficiaries - BUT as a will it is then subject to probate, which means you wasted your money setting up a trust to begin with.

HTH clear things up a little! It can be a pretty confusing subject, I know ;))
 
Be careful with living trusts .

most states do not consider your house a protected asset when held in a revocable trust ..
in personal name a house is not counted in the spend down to qualify for Medicaid long term care .

That house in a trust is unprotected From being spent down ..many times the house now has to be sold and the assets spent down in order to qualify .
 
mathjak107 said:
Be careful with living trusts .

most states do not consider your house a protected asset when held in a revocable trust ..
in personal name a house is not counted in the spend down to qualify for Medicaid long term care .

That house in a trust is unprotected From being spent down ..many times the house now has to be sold and the assets spent down in order to qualify .
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Which is as it should be, I think. If you own a home it is a financial asset (hopefully) the same as your checking account, car, or retirement savings. All of those assets are part of your estate's net worth - whether it is the IRS or Medicaid looking at you.
 
Lethe200 said:
Which is as it should be, I think. If you own a home it is a financial asset (hopefully) the same as your checking account, car, or retirement savings. All of those assets are part of your estate's net worth - whether it is the IRS or Medicaid looking at you.
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Except a home in personal name in most if not all states is a protected asset .

the dollars are not part of the required spend down to qualify like the other assets
 
I have a will. I sometimes wondered if I should have a trust drawn up but from what I've read, I don't need one. What's not covered in my will is covered by specific beneficiary designations for my brokerage accounts.
 
OneEyedDiva said:
I have a will. I sometimes wondered if I should have a trust drawn up but from what I've read, I don't need one. What's not covered in my will is covered by specific beneficiary designations for my brokerage accounts.
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We have everything covered under beneficiaries for the kids ….

however when I retired we went to see a highly regardet advisor to go over a few things .

he works with both a tax advisor and an estate attorney as a cohesIve unit .

we’ll unbeknownst to us at that time we fell into New York’s tax cliff .

New York only had a million dollar estate tax exemption and if you went over you didn’t pay on just the overage .

the estate looses the entire exclusion and pays from dollar one .

so we needed some very expensive special trusts called disclaimer trusts so we could potentially pass 2x the limit .

that was almost 2 decades ago and now ny is the same as the federal .

but if ever needed we can pass 2x the federal amount which I doubt we will ever need.

what is nice is these trusts don’t come in to play at all unless needed .

the surviving spouse has 9 months after the death of the deceased to split the estate in half if needed
 
C50,

ms gamboolgal and I have both and pile of other legal/financial instruments.

ms gamboolgal and I saw firsthand early in our marriage when some of our relatives passed away and they did not have their financial and legal affairs in order. The Inlaws/Outlaws, kids, grandkids got very nasty with the infighting over the Estate, Monies and Properties. Their behavior was very sad to observe.

Those experiences early on and later in life really made a impression on us and we got a simple Will made up when we were young and have revised and added to it multiple times over the years as life changes occurred.

Much later in life, my Father left me as a only child with a mess to take care of when he passed away several years after my Mother had passed. In my Dad's case, I tried to talk to him to plan properly over the years - but he would have none of it. And it was a real mess and headache for us to address all the issues after he passed. So unnecessary !

Legal Instruments we currently have are listed below
  • Assignment of Property
  • Certification of Trust
  • Declaration of Guardian – Myself
  • Declaration of Guardian – Spouse
  • Directive to Physicians – Myself
  • Directive to Physicians – Spouse
  • Durable POA - Myself
  • Durable POA – Spouse
  • Last Will & Testament – Myself
  • Last Will & Testament - Spouse
  • Medical POA - Myself
  • Medical POA - Spouse
  • Recorded Special Warranty Deed for Residence
We use a Attorney and also work in conjunction with our Local Bank, Insurance Provider(s), Fidelity / Vanguard to ensure our Financial Portfolio and Legal Instruments are all consistent vs our Investments and no conflicts exist.

We review our Documents formally with the Attorney and Financial Institutions as needed and/or as life changes occur. This has probably worked out to a average of doing a review and revisions about every ~5 years or so for the last 15 years as we approached retirement and now post retirement.

As others have said, a couple of good resource(s) are:
https://www.bogleheads.org/index.php
https://www.early-retirement.org

It's a hassle and Attorneys are not cheap. But it's a "good" problem to have.

All the best

gamboolman....
 
Lethe200 said:
Trusts will NOT save on taxes. That is not the purpose of a trust. Discuss estate taxes with your tax adviser, or find one through your state's bar association.

A lawyer can set up a Revocable Living Trust for you, but it will be your responsibility to actually move those assets into the trust. Payable on Death accounts - checking/savings; IRAs/401k's - do not necessarily have to be in the trust; discuss the pros and cons with your lawyer.

Be aware that even with a trust, most banks will want you to fill out THEIR legal form.
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They do if they're done at certain foreign banks or an off-shore business you've created. No paper-trail, and it's not illegal.
 

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