Choosing a Will or Living Trust for Your Estate Plan
Making the decision between a Will or a Revocable Living Trust is the first step when starting an estate plan. Generally, both Wills and Living Trusts can accomplish the same end results by addressing how you want your assets transferred to your designated beneficiaries. The choice between a will or a living trust is a personal choice that will depend on what is most important to you.
Factors to Consider When Deciding Between a Will or Living Trust
There are many factors to consider when selecting an estate plan that is the most effective for your needs. Those factors include:
- How your assets will be administered, transferred, and distributed during your lifetime and after your death;
- The size of your estate and the type of assets that you own;
- How the ownership of your assets is titled;
- Whether you or any prospective beneficiary will need assistance in managing your assets;
- The tax consequences of your estate plan;
- Your family situation and whether relationships in your family are reasonably harmonious.
- The cost of a Will and a Revocable Living Trust.
Differences to Note Between a Will and Living Trust
Although both Wills and Living Trusts provide instructions about who will receive your assets, they have several differences. Each has its own advantages and disadvantages.
Wills
Generally, a Will is a basic estate planning tool to make sure your assets are distributed according to your instructions. It avoids distribution of assets according to Michigan’s laws of intestate succession, given the fact that most people would rather choose who will receive their estate assets upon their death than allow the State to make the decision. A Will allows an individual to appoint a representative to make sure distributions of tangible personal property, assets and real estate are made according to your instructions. A Will also permits the nomination of a guardian and conservator for minor children and identifies who will take control of your funeral arrangements.
While it is an easier process, a Will does come with some drawbacks. For example, Wills offer limited control over the distribution of assets and will involve probate administration through the probate court. Although typically informal probate is available for a Will, probate administration is generally court-supervised and depending on your entire estate, can be costly and take a long time to complete. In addition, Wills don’t go into effect until you pass away.
Living Trusts
Although a Living Trust is a bit more complicated, it offers greater control over how your assets are managed and distributed both during your lifetime and after death. A Trust takes effect as soon as you sign the Trust document and can simplify the process for you and your family because it’s a document intended to have an impact while you’re still living. Provisions in a Trust can address not only how you want your assets distributed upon your death, but also how you want your assets to be used for your care if you become mentally or physically unable to care for yourself and make your own decisions.
Another advantage of the Living Trust is that as Trustee of the Trust, you maintain total control of the trust asset during your lifetime with the ability to transfer assets into the Trust and out of the Trust. In addition, you are able to amend or even revoke the Trust during your lifetime however it, along with your instructions for distribution of the Trust assets, become irrevocable upon your death.
Most Living Trusts include what’s called a “pour over” Will as part of an estate plan, which is a type of Will designed to work in conjunction with your Trust. With a pour over Will, anything a person owns outside of their Trust that is subject to probate administration will be conveyed to your Trust at the time of your death. Pour over Wills essentially act as a backup plan to ensure that all of your assets which you may have forgotten to title in the name of your Trust, goes to your Trust.
Keep in mind that after you create a Trust, you also need to fund the Trust by titling assets in your name as trustee of the Trust. This does make Trusts a bit more complex to set up, but it avoids the expenses of probate administration which can be substantial. This alone could more than justify the additional complexity and cost of setting up a Trust.
Note that even after you sign a Will or Trust (or both with a pour over Will), several additional steps may need to be taken to implement your estate plan. For instance, beneficiaries on bank and financial accounts, life insurance policies, and retirement accounts may need to be changed to coordinate payment of assets and proceeds with your estate plan.
A Do it Yourself Will or Trust Is Not Worth the Risks
Many things can and sometimes do go wrong if a person takes the do it yourself route for a Will or Trust. The small amount of money saved doesn’t begin to make up for the eventual cost and potential outcomes. Doing something yourself is a laudable approach for many endeavors, but in estate planning, the results of the DIY approach can be devastating and irreversible.
If you’re considering using an online service to make your estate plan, talk with a local estate planning attorney before you make a final decision. If you already made an estate plan using an online service or forms, at the very least, you should review your documents with a local estate planning attorney.
Schedule a Free Consultation with a Respected Ann Arbor Estate Planning Attorney
Ager Law Office helps individuals and families with Wills, Trusts and all aspects of estate planning. From our Ann Arbor office, we serve clients throughout Washtenaw County.
For additional information on our reasonable flat fees for Wills, Trusts and other Estate Planning services, or about updating your existing Will, Trust or estate plan, contact our experienced estate planning attorney, Bill Ager for a free consultation.
- Call (734) 649-0784
- Send an email to bill@agerlawoffice.com
- Use our online contact form