Thursday, January 19, 2017

Wills vs. trusts: some advice


I am going to assume that when you say using a will rather than a trust, you are also referring to a probate administration and a trust administration.
I suppose the main reason that a will is preferable to a trust is cost. Trusts can be expensive to set up. Not as expensive as they were many years ago but they still cost a great deal of money.
However, keep in mind that although trusts cost more to set up than wills, the costs associated with administration after death are much lower when using a trust.
If money isn’t a concern, there are still other reasons to consider using a will rather than a trust.
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One of those reasons involves the authority of the court that comes with probate. A probate court’s order can be useful in the event that there are issues during administration. For example, consider the situation where a home needs to be sold during the administration and there isn’t agreement as to its value. If the trustee sells the home, he or she opens themselves up to second guessing by the beneficiaries. On the other hand, if the personal representative wants to sell a home in a probate administration, the personal representative can seek approval from the court. That court approval can protect the personal representative from second guessing of the devisees. A court order is a nice shield for the personal representative that isn’t readily available to a trustee.
Another reason that a will and probate might be preferable to using a trust is because of creditors. Creditors have up to nine months to file claims. However, that time can be reduced to three months if notice of an estate administration is published in an appropriate local newspaper. That could be handy if you are concerned about large but unknown creditors. In probate unknown creditors receive notice when it is published and they only have three months to file claims or else those claims are barred. If a creditor misses the notice, they may miss out on the ability to file and collect on a claim.
Since notice of a trust administration isn’t published, the claim period isn’t shortened and the trustee runs the risk that a creditor can show up on the last day to open a creditor’s estate and file a claim.
Depending on your circumstances, probating a will and opening an estate may make a lot of sense. Probate offers advantages that a non-probate trust administration can’t. It all comes down to the circumstance.