Aug 10
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Legal Ease – Wills-Yes! Trusts-Maybe!
Do I need to have a will? The answer is a resounding “yes.” Do I need to have a trust? The answer is a qualified “maybe.” Here is why.
Wills are cornerstones of estate planning. It appoints a representative when you die; appoints someone to take custody of your minor children; it can create a fund for your children that will be managed until they are able; and, of course, directs who is to receive your assets. In the absence of a will, statutes direct the disposition of assets and the court will oversee the appointment of legal representatives for your estate and minor children.
A trust can be an effective way to do similar things that a will does, if you are willing to give up the title and control of your assets. Instead of you owning your assets, the trustee becomes the owner. If you retain the right to control or receive any benefit from the trust, the assets are subject to inheritance tax the same as if you died without the trust. Some unscrupulous people (lawyers included) “sell” trusts on the pretense that it will prevent inheritance taxes and avoid costs involved in administering your estate (probate). In most cases, they do not. Probate and tax avoidance can only be achieved if you have assets re-titled, a sometimes expensive and cumbersome procedure, have given up all rights to the assets, and are not controlling the trust.
The best reason for trusts are for the protection of those who are not capable of handling large amounts of assets, such as minors, inexperienced, elderly, those with a debilitating illness, or keeping insurance policies from being subject to federal estate taxes. For a very small percentage of people, the use of trusts can be a valuable tool.
There are many varieties. For example, trusts created while you are living are inter-vivos and those created through your will are testamentary. The use and drafting of wills and trusts are unique to each person. Since there are so many legal and tax ramifications, it is best to consult with a lawyer and tax professional who are familiar with your situation, and skilled in planning your estate.
Keith A. Bassi, Esquire
President and Managing Director at Bassi, McCune, & Vreeland, P.C.
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