You’ve heard the saying “You get what you pay for” – usually about the time that you have discovered that the great deal you snagged did not really save you anything because what you purchased did not live up to your expectations. And now you have to spend more money to fix it or replace it. This saying can, all too often, hold true for your ESTATE PLANNING as well. Sometimes the least costly solution is simply not the best solution, nor the most cost-effective. A WILL, for instance, is cheaper than a TRUST, at least in the near term. It costs less to the person obtaining it and, of course, only becomes operative upon you passing. But to make it effective on your passing, especially where you own property that is titled (i.e. real estate), your heirs will have to probate the WILL, have someone appointed as a Personal Representative, pay the costs for filing with the court, administer the PROBATE estate, and possibly pay an attorney to assist them.
On the other hand, a TRUST may cost more up front, but in the long run is often able to leave more to the TRUST beneficiaries because the TRUST does not have to incur the costs associated with PROBATE administration. Further, the TRUST does not need to be submitted to the court to be made effective. Rather, a TRUST becomes operative immediately after you create it, and you can use it as the central mechanism to coordinate your ESTATE PLANNING needs. And, because it becomes effective immediately, management of the TRUST assets is easier during the lifetime of the trustor (the person creating the TRUST) especially where the trustor becomes impaired. In this instance, a successor TRUSTEE takes over without court intervention, and provides a seamless process for management of the TRUST assets for the benefit of the trustor, without resorting to the need for a CONSERVATORSHIP proceeding (another type of PROBATE proceeding which declares a person incompetent and appoints a person called a CONSERVATOR to manage the incompetent person’s property and assets for the benefit of the incompetent person).
TRUSTS have other benefits too. Because you avoid filing PROBATE, your estate plan remains confidential. For many people, this is a very important consideration. Where you have a significant amount of assets, a TRUST can help reduce estate taxes which in turn allows you to leave more of your property to your family, friends and charities.