.Sure, it can seem a little quirky at times, but I believe that people should understand the law. And it's my job to help them. Whether drafting a simple will or a complex trust or contract for clients, serving as an advocate in court or mediating disputes, I go to great lengths to explain the reasons behind the legal concepts confronting my clients.
Plain English answers and outstanding results have made me a ten-time ANG readers' poll winner for Best Attorney.
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Question of the Week: How much does probate cost?
(One of a series of spotlighted subjects. To find many more questions and answers, go to the Frequently Asked Questions page by clicking here.)
A living trust (sometimes called a “revocable living trust” or an “intervivos trust”) is yet another method for the orderly winding up of a deceased person's affairs, but without the involvement of the court (i.e., no probate.) A will and a trust are merely tools to accomplish a single objective: passing your assets to your beneficiaries upon your death. It is important to remember that (with infrequent exceptions) the only reason for establishing a living trust is to avoid probate. Other goals, such as minimizing estate taxes or ensuring that your wishes are carried out, can just as easily be accomplished through a will.
Nobody needs a living trust, despite what your neighbor may have told you or what you may have heard at a seminar put on by folks who really only want to sell you an annuity or long-term care insurance. A living trust has both advantages and disadvantages, compared to a will. Its advantages include no court supervision, privacy, faster and smoother (usually) operation than probate, and an overall monetary savings. Its disadvantages include no court supervision, extra bookkeeping or accounting problems during your lifetime and the fact that it is more expensive for you than having only a will. In addition, a trust is a very complex document and few laymen fully understand it.
I always explain to my clients that a living trust is of no benefit to you. We prepare a living trust to benefit our intended beneficiaries (usually our children), by speeding up the process and minimizing the cost after our death. In return, we pay considerably more to have a trust prepared instead of a will, and we have to make sure for the rest of our lives that our trust is kept in order and up to date.
As an example, a will for my wife and myself might cost in the neighborhood of $250 - $500. A living trust (and its companion documents) might cost us $1,500 to $2,500. But if we have a $500,000 estate, attorney’s fees for probate would cost our children $13,000 – a cost which could be avoided if we did a trust. So by setting up a trust, we have caused a savings of possibly $10,000 to $12,000. However, we never see that savings, because it only occurs after our death.
Therefore, if I have no children, and all of my estate is going to charity, I may not care whether or not a probate is necessary after my death. I might prefer the cheapest and easiest solution for me.
In short, whether to establish a living trust depends on how you, personally, view the pros and cons. You wouldn't allow a stranger or a family member to tell you that you should be a dog person or a cat person, or that you should drive a Ford or a Toyota. If someone tells you that you should have a living trust, that person either doesn't have the full story or is trying to sell you something. Be careful and consult a qualified estate-planning attorney.