By Richard H. Cochran
I am often asked by clients if they need a Will or if they need a Living Trust. I usually tell them that it depends. It depends upon the circumstances at the time the clients seek legal advice.
Younger adults, who may have small children, are commonly concerned about who will be the guardian of the person of their minor children if they were to die. In a Will it is possible to nominate one or more persons to act as guardian of the person of minor children. It is also possible to nominate a guardian of the estate of minor children. Until children reach age 18 they are not able to make their own decisions about various matters and they are not able to enter into contracts.
A young married couple may also not have much in the way of assets. For people in these circumstances I generally recommend a Will that includes a provision wherein the married couple nominate a specific person to become the guardian of the person and the guardian of the estate of their minor children if both parents are deceased.
The same young married couple that has concerns about who will become the guardians of their minor children often have life insurance that could be used to fund a trust arrangement that provides support for their minor children during their minority.
When the situation is such as described in the paragraphs above, I generally recommend a Will with a trust provision in it for the married couple.
For married couples whose children are past the age of eighteen and for married couples whose financial affairs are fairly settled, I generally recommend to them a Living Trust for disposition of their assets. The administration of a Living Trust is private and, except in unusual circumstances, does not involve the Court system. On the other hand, a Will has to be probated in the Court system of the county in which the person resides at the time of death.
A Living Trust is a directive to a person, called a "trustee," who becomes responsible for distributing the assets of the creator of the Living Trust, called a "settlor." Usually, the surviving spouse of a married couple is the person selected to administer the Trust on the death of the first spouse. Following the death of the surviving spouse, however, a person selected by the parents is given the responsibility of distributing the parents' assets according to the directions of the parents.
The cost of preparing a Will versus the cost of preparing a Living Trust is significant in that it costs significantly less to prepare a Will than it does to prepare a Living Trust. This is partly because when a Living Trust is created, the assets of the persons who establish the Living Trust have to be transferred into the Living Trust. By that I mean that the title to assets, such as real estate and investments, have to be transferred into the Trust. This takes more work on the part of the attorney in terms of setting up the Living Trust.
When a Will is probated in the local Court system, the legal fees incurred are often more than they are for the administration of a Living Trust when the value of the assets are comparable. So there is a trade-off. It costs more to set up a Living Trust and transfer the assets into it than it does to prepare a Will. However, the probate of the Will generally is more expensive than the administration of the Living Trust.
If you have questions about Wills or Living Trusts or are interested in creating one, please contact our office for a personal consultation with an attorney.