Is it better to have a will or a trust in Utah?
October 5, 2017 - Posted by: admin - In category:
That is a good question, but perhaps not the right question. What is good for one person may not be the best solution for another person. Let’s briefly compare the use of Wills and Revocable Living Trusts in Utah.
Last Will and Testament
A Will, sometimes known as a Last Will and Testament, sometimes referred to as a Pour-Over Will and also given various other titles, is the most basic method of providing for the transfer of property upon death. A Will is designed to tell the probate court, and all other parties, who gets what. The Will specifies an executor to supervise the payment of creditors, re-titling of property and distribution of the same. A Will is also used to designate a guardian for minor children and perhaps designate money in “trust” (known as a testamentary trust) to benefit a charity, minor children and/or a special needs child, among other reasons.
A Will may be amended, revoked or replaced by the maker of the Will (known as the testator) at any time during life, so long as the maker of the Will remains mentally competent to do so. By operation of law, a Will is not “active” until the death of the testator. This is why using a Will for lifetime protections and planning is ineffective. In other words, if I am in a coma or otherwise unable to make decisions on my behalf and in need of someone to access and transfer my assets, a Will is of no use. Likewise, a Will deals only with property and does not typically address the authority of spouses, children or others to make medical treatment and other health care decisions on behalf of another. Such medical decisions are most often (and best) handled through a Utah Advance Health Care Directive and associated Health Care Power of Attorney or Living Will.
It is important to remember the old phrase, “where there’s a Will, there’s a probate.” In other words, if you have a Will or have no estate plan, your estate is bound for probate court upon your death. The optimal way to avoid probate and still achieve many of the positive attributes of a Will is to establish and maintain a Living Trust. Click here to read more information on the estate planning myth relating to Wills and probate court.
Like a Will, a Living Trust is executed during the life of its trust maker. Further, similar to a Will, a Revocable Living Trust can be amended, changed and revoked during the life of its maker(s). Each person must have their own Will, but in contrast, married couples can share a Revocable Living Trust. This does more than just save paper. Through use of a joint trust, a husband and wife can establish greater uniformity and concerted direction relating to their joint estate plan than would otherwise be possible if they simply had separate “I Love You Wills” (this is the common phrase used to describe the regular occurrence where husband leaves all of his property to his wife via Will and wife’s Will likewise leaves all property to her husband).
Assets that are legally connected to a Living Trust and properly maintained within said Living Trust are free from the probate process at the death of the testator(s). Such assets are simply transferred, by operation of law and per the specified instructions contained in the Living Trust document, to the specified beneficiaries. Two of the most important benefits of using a Living trust are that of probate avoidance and lifetime benefits and protections. As mentioned above, a Will provides neither such benefit.
What are the potential downsides of using a Revocable Living Trust? Higher upfront costs and more complexity can be viewed by some as negative aspects of a Revocable Living Trust. However, neither of those are necessarily true in each instance. Further, concerning the cost point, it is wise to look at the larger picture and long-term costs and benefits. While it most often will cost more on the front end to set up a Revocable Living Trust when compared with the cost to retain an attorney to draft a simple Will, remember that this is not the true indicator of estate planning costs. As we mentioned earlier, Wills almost always need to be probated, and there is an associated cost for each such probate. It is my experience that the cost of the Will plus the cost of the eventual probate is rarely less than the cost of the revocable living trust.
Please note that there are many different types of trusts. Revocable living trusts are the most commonly used (at least for non-billionaire individuals in Utah), as such trusts usually make the most sense. Even so, there are also irrevocable trusts of many different types, testamentary trusts, etc. Further, Revocable Living Trust indicates both that the trust was made during the life of the trustor(s) (i.e. maker(s) of the trust) and also that it is revocable in some manner when instituted. There are also Irrevocable Living Trusts (most often just called Irrevocable Trusts) which are designed to serve very different purposes.
So which option is right for you?
This is another very good question, and this is the right question to ask. However, please do not feel that you are alone in making such determination. Rather, you are wise to research, learn as much as you can and also to consult with a qualified estate planning attorney (preferably one who comes highly recommended from a family member or friend). Just as you would not make a medical procedure determination without following similar steps, including consultation with one or more medical professionals, you should also follow a similar approach in making estate planning decisions.