The estate planning process is filled with difficult decisions. Considering what’s at stake, these decisions can be agonizing.
Of course, the most fundamental question is how do you want your assets distributed after your death?
Another way of phrasing this question is what tools do you want to use to organize your estate? There are many to choose from, but for many estate planners the choice comes down to either a will or living trust.
Both have merits and shortcomings. Here’s what to consider when choosing between the two:
Cost is a significant factor. Unlike a will, a living trust is not subject to probate court and that means it’s not subject to probate fees which, depending on the state, can be as high as 10 percent. However, the living trust is more costly to set up and requires active management.
Considering how cost is distributed, conventional wisdom dictates that a living trust is better suited for high-net worth individuals. Obviously, 10 percent of a very wealthy person’s estate is likely to far exceed the cost of managing the trust, while probate costs are likely lower for someone of average means.
The probate process can take time — often more than a year – which means heirs don’t immediately receive their inheritance.
The funds in a living trust, however, are made available to the heirs as soon as the Estate approves.
The assets governed by a will can only be accessed by a heir upon the testator’s passing, this is not the case with a living trust.
Assets can be placed in, and taken out of, the trust at the will of the settlor. Furthermore, beneficiaries can access wealth and property in the trust with the settlor’s approval. This kind of flexibility is appealing to some estate planners.
Many Tennessee residents are familiar with estate planning terminology and processes; still, all legal documents should be drafted with the help of an estate planning attorney. Having professional help prevents mistakes now and headaches down the road.