Planning For The Future: What To Consider When Considering a Will or Trust

By Thomas N. Taneff

I came across a telling statistic on the internet recently. Nearly twice as many Americans have cell phones (240 million) than have a will (126 million). And while I am wholly dependent on my cell phone, as an attorney who handles hundreds of probate cases annually, I can say unequivocally a will, perhaps even more than a cell phone, is something everyone should have. But clients regularly ask me if they have a will do they need a trust too? Or is one better than the other? To answer these questions let's first look at the reasons a person should consider each.

Why a Will

No one should be without a will. A will simply put spells out your wishes. It reflects how you want your assets distributed. Without a will, the probate court will make decisions regarding who is in control and the State of Ohio decides who gets what. With a will you can control when a minor gets a hold of their inheritance only until the age of 21.

Many times clients with few assets think they don't need a will. This isn't the case. Regardless of how much you have, if you have minor children you must have a will. A will is critical to name a guardian if both parents are unable to raise the kids. If you have neglected to name a guardian in your will then you are at the mercy of the court to appoint someone. It's wise to get approval from your potential guardian and to also name an alternate guardian.

Why a Trust

A trust can offer different benefits. A trust should be created when one wants to hold back their assets and distribute them over time. When setting up a trust you will need to select a trustee. Instructions are written that specify how the trustee holds and manages the assets and then gives them away over time. With a trust you can control money for a child beyond the age of 21 or keep the money in your bloodline after your death rather than having it end up with a child's spouse should the child die or divorce. A trust can also provide a lifetime use of assets and ensure property stay within a family.

Will vs. Trust

Both wills and trusts are valuable estate planning documents. In fact in all cases when someone has a trust they also need a will to ensure if the trust is not completely funded the assets in the will pour over into the trust. But there are also minor distinctions that can make one or the other a better option in particular situations.

Probate-In most cases, wills must go through the formal probate process. Most wills are handled within 3 to 9 months, but if an estate is large, complex or contested your heirs can face a complicated process lasting several years. And in most cases, beneficiaries won't receive their inheritance until after probate is concluded. If you have successfully transferred all your assets to your trust, probate can be avoided. That means decisions regarding assets aren't held up nor are payments to beneficiaries.

Privacy-Once a will is probated, it becomes public record. The will's terms and assets are revealed. If a trust is properly funded, it's more likely your privacy will be maintained and you can transfer property without public scrutiny. The terms of a trust and the assets are typically not public knowledge.

Expense-In general, trusts cost more than wills to create. But the savings can be offset by the potential expense of probate. In addition, when an estate is probated, "statutory "fees are paid. Those are calculated based on the size of the estate.

Ease-Upon proper execution of a will, the job is complete. Careful administration of a trust over one's lifetime is a bit more involved.

Taxes-With a trust one can reduce or avoid the effect of Federal Estate Taxes. In 2008, assets up to $2-million dollars are exempt from Federal Estate Taxes. With a carefully constructed Living Marital-Family Trust, you can effectively "shield" up to $4-million dollars for your heirs and avoid Federal Estate Taxes.

Many attorneys will advise their clients to choose between a will and trust based simply on the value of their estate. In Ohio if your estate is valued at less than $35,000 you can be relieved from full probate administration. Then a will should suffice.

Ultimately though, everyone's circumstances are different. A consultation with a probate/estate planning attorney may be the best way to determine how to leave your loved ones what you have. And in the end, you can't put a price on peace of mind.

Thomas Taneff is a Columbus Attorney who practices in Probate, Estate Planning and Adoption Law. You can reach him at 614-241-281 or www.tanefflaw.com