A Will and a Trust are two completely separate instruments which do separate things.  A Will must be probated which generally costs more, takes longer and your personal information is made public in the court records. A Revocable Living Trust does not need to be probated, keeps your information private and generally is less expensive, but not always. It is important to know that there are benefits and pitfalls with the use of either a Will or a Trust depending on your needs and circumstances.  Call Now to set up your FREE Family Wealth Planning Meeting valued at $750.00, and make sure that your loved ones will be taken care of in the best way possible.

What Is a Will?

Black’s Law Dictionary defines a Will as the legal expression of a man’s wishes as to the disposition of his property after his death.  Perhaps a more practical definition would be an agreement to pay an attorney to file a lawsuit  at your death–Probate–in behalf of your creditors to pay those creditors, together with court costs and attorney’s fees, with the rest of the estate going to the heirs you name in your will.

What is a Trust?

A Trust is an agreement between three parties:  the Trustor sometimes called the Settlor is the person who makes the Trust.  The Trustee is the person whom the Trustor appoints who manages the trust property and assets.  The Beneficiary or Beneficiaries are the people for whom the trust is created, who receives the “benefit” of the property in the trust.  The Trustee typically has a duty to the Beneficiary to manage the Trust property according to the instructions given by the Trustor  that provide for the best interests of the Beneficiary.  The Trust provides for many flexible ways for the Trustor to plan for and dispose of the Trust property for the chosen beneficiary.

Why Would I Use a Trust rather than a Will?

As described above, a will must be probated.  Probate is a Court process where the Court–the Probate Court determines whether a will you create is valid, and then the Court appoints a personal representative to manage and to give the property of the estate to the heirs as set forth in your Will according to the instructions of the Court.  Court records are available to the general public to review, which mean that the personal information of you and your heirs become part of the Court record for all who may want to review such court records to see  Probate takes months of time to publish a Notice to Creditors and to allow Creditors to file claims in the estate, before the personal representative can distribute the property to your heirs. A Trust is an effective way to avoid these problems.  With a trust, probate is avoided, as the Trustee has full power to act according to the terms of a trust which you the Trustor have set forth in your Trust document.  While a Trustee you may appoint may charge for his services, or for the attorney’s fees he hires to help him administer the trust, the court fees and attorney’s fees necessary to probate a will are averted, which are usually much higher.  Also, your Trustee acts privately, without having to file anything with the Court  or to become public.

Is a Trust Always Better than a Will?

Most of the time, using a Trust is more advantageous than a Will.  There are exceptions, as all individual circumstances vary.  If, for example, you own less than $100,000.00 in liquid assets, ie. money or stocks, and you own no real estate, and you will not own more than this in the next few years, there is usually no need to probate a Will according to Utah law, and therefore the costs, time and loss of privacy are not an issue.  In this case, a Will may be easier and cheaper than a trust.  You also have to be aware what your bank or depository would require before it would be able to distribute your assets after your death.

What Kind of Trusts Are There?

There are many different types of trust which are designed to accomplish a large variety of purposes in estate planning.  The most common type of trust is the Revocable Living Trust.   This is a Trust which you can revoke at any time after you create the Trust.  Beware of anyone who may tell you that because you deed your assets into your trust that those assets are protected from creditors.  Because you can revoke it, your Trust does not stop creditors from being able to collect on your assets which you put into the trust. There are other types of trust which are designed to protect the assets in the trust from Creditors, which trusts are not revocable.  This means that once you put your assets in such trusts, you can never take them out except according to the terms of the trust document.  There are many different types of these irrevocable trusts which offer many different advantages, including securing the assets in the trust from being taken from creditors, or even from a spouse who divorces the Beneficiary of the Trust.  There are corresponding disadvantages in forming such trusts, as you lose much control of your assets you may place inn such trusts.

Can the Trustor who creates a Trust also be the  Trustee or the Beneficiary?

If you create a Trust as a Trustor, you can indeed also be the Trustee or the Beneficiary of the Trust.  You can also be all three–the Trustor, the Trustee and the Beneficiary.  in fact, many or even most Revocable Living Trusts are created with the Trustor being the Trustee and the Beneficiary.  When you die, the Trust Beneficiaries change to become your children, or your other family members whom you would choose when you form the Trust, just as a Will names heirs.  You would also choose a Trustee to succeed you to continue to administer the trust or to give the assets in the trust as you set forth in the terms of the Trust.

Can a Power of Attorney substitute for a Will or a Trust?

There are several types of Powers of Attorney which accomplish a variety of purposes.  A Power of Attorney which you make to appoint someone you choose to sell or distribute your property can serve useful purposes, but it is invalid at your death.  Also, a Power of Attorney is also invalid if you are incapacitated such that you do have sufficient presence of mind to make decisions, unless it is a Durable Power of Attorney.  This type of Power of Attorney specifically gives power to the person you appoint to make the decisions when you are incapacitated.  All such Powers of Attorney, however, are invalid and ineffective at your death.  A Will or a Trust is then necessary to convey your assets.

What If I Die Without a Will or a Trust?

If you die without a Will or a Trust, you are said to die intestate.  In such an event, your assets would have to be probated in court at your death, unless they were less than $100,000.00 in value, and did not include real property.  In this event, the probate court would distribute your assets according to the manner in which Utah law has determined who would be your heirs to receive them.  Your children would be the first in line.  If one of your children died beforehand, your grandchildren of that child would receive that child’s share.  If you had no children, your parents would receive your property.  Your siblings would be next, or their children would receive the deceased sibling’s share.  If you had no hairs at all, the property would go to the State of Utah. If you have not planned sufficiently for your family and loved ones at your death, many unexpected things can happen when State law takes the place of your own planning.  For example, if you have minor children, the probate court would appoint a legal guardian to manage the children’s estate until they reached 18 years old.  Your estate would pay for this legal guardian and his attorney to represent him.  At 18 years old, the estate would be distributed to each child according to the child’s share as a lump sum.  Your children may not have the knowledge or discipline to save the money for education or the future, especially when there are unscrupulous people ready to entice him with a fancy Corvette or a lush vacation. Maybe the life insurance policy you may have gotten to protect your loved ones is not at all sufficient to really do so after all without proper planning!  At our office, we go over a large number of possible contingencies and scenarios in planning your estate so such events are properly planned for according to the choices you make for your loved ones.

Do I have to worry about estate taxes?

At this time, the amount of the value of assets you must own before Federal estate taxes begin to accrue is over $5,000,000.00.  This amount is called the estate tax exemption.  There is no taxes on your estate in Utah.  A few other states do have estate taxes which may affect you if you own a significant amount of property in those states. This Federael Estate Tax Exemption amount goes up a little each year to adjust for inflation.  If you own over this amount, your heirs will have to pay a 40% tax on the amount.  This includes life insurance and all assets at your death.  There are ways to reduce the amount of taxes through estate planning which can become complex, and which we can help you with.  This includes planning such that the estate tax exemption for you and your spouse can be added, so you have twice the exemption, or over $10,000,000.00 to pass to your heirs tax free.

What if I make a Trust, but I fail to put property in that trust?

Believe it or not, one of the most common things which happen at one’s death is the failure to put one’s assets into the trust which an attorney created for that person.  This can happen if your attorney fails to follow up and see that your assets are deeded and transferred into the trust in the right way.  It doesn’t bake sense to have a beautifully drafted Trust document only to have it entirely ineffective because your assets were not put into that Trust.  You would have reason to be annoyed, just the same as if you purchased a bottle of milk or a bottle of Coke, and came home, only to find that there was no milk or Coke in the Bottle! Since circumstances can and do change after the time you make your Trust, where you may acquire more property, or where the laws change, it is necessary to have someone you can trust to keep your Trust and other documents up to date.  At our office, we have a plan where we keep all of our clients’ estate planning documents up to date by checking what needs updating every three years, and by also providing more updates and changes based on a membership agreement.

Aren’t my children  well able enough to take care of my assets upon my death?

Many people have the attitude that what happens to their assets at death is their children’s problem.  They should be able to handle it.  I would say to such people that in fact you are the one making it their problem.  Such a problem would not have to be a problem with proper planning which is easy to accomplish before that time comes.

Call today for more free information.

If you would like to know more about how a will or a trust would help you plan for your loved ones, call us at (801) 453-2000. We at the Law Office of Spencer Ball desire to give as much information that we can about how seriously your planning for your loved ones will affect them in the future.

Call us about setting up a Family Wealth Planning meeting at our office at (801) 453-2000.  In this planning session, we go over all of the essential details of your particular situation and family needs.  It is a $500.00 value, but it is yours free if you mention this website.  Telephone: 1-801-453-2000