Trust vs. Will

[Fairy]

What are the pros and cons of one over the other? Finance and, worse, legal finance, is the last thing I know anything about. Other than maybe calculus. Why would one do one instead of the other?

[nfowife]

You should absolutely have a will. Depending on your circumstances you may or may not wish to have a trust. We do not have a trust currently but we provide for one to be set up in our will in the event of our death.

[rin]

You should absolutely have a will. Depending on your circumstances you may or may not wish to have a trust. We do not have a trust currently but we provide for one to be set up in our will in the event of our death.

We just went through this process ourselves, and got some astoundingly bad advice from the first lawyer we went to. From what I can tell, the only reason you might want to have a trust would be if you have a very large estate (read, over a million dollars) that would be subject to the estate tax. If this is the case, it would make sense to set up what's called an irrevocable trust, where the assets essentially become the property of the trust now, before your death, and are no longer yours. From what I gather, if you do not have a very large estate it does not make sense to have a trust set up before your death.

Our will also stipulates that a trust should be formed after our death. I think that's pretty standard.

[Fairy]

To be specific -->

* Why are wills better?

* If there is an older couple with (or without) grown kids, are there benefits to them having a trust instead of a will? Meaning you don't have to worry about who's going to raise the kids. Monetarily, why a trust?

* If you have a revocable trust, then can't I as the owner just say "nevemrind" or change beneficiaries without going thru the lawyers and filing it, etc.?

I'm looking for the pros and cons to both.

[Zansu]

If you don't have a will, the laws of the state in which you live will decide how your assets are divided when you die. That is called "dying intestate."

If you have a will, it directs how your assets are handled so the state has no say.

You can create a trust at any time. It's a legal entity that gets title to whatever assets you give it. If you put your house in a trust, the title is held by the trust. If you want to sell, the trustee (legal representative of the trust) is the one to sign the docs. You can be the trustee, but you are acting for the trust, not as a person.

Older couples would create a trust because they can make someone else a trustee. Example: My aunt and uncle created a trust. I am a trustee, along with one of their children. So oldest cousin/trustee can't act with my approval. Neither of us can sell things without the other's consent. The trust pays for aunt and uncle's skilled nursing care. Whatever is left in the trust will be left to the cousins in accordance with the terms in the will. Both uncle and aunt are now incompetent. But because all of the assets are in the trust, they can be managed by the trustees.

[niccig]

We did a trust to avoid going through probate, even with a will, you still have to go through probate and apparently in CA it can be complicated. It's set up now, so it's done but in hindsight I'm not sold on it as it cost more than I think it should have - but that was issues with the lawyer and not trust vs will.

http://www.nolo.com/legal-encycloped...ate-29848.html

http://www.nytimes.com/2005/11/20/re...te/20home.html

[California]

The pros and cons vary by state. I attended a free workshop on this -- maybe you can find a workshop in your area or through your work?

In California, our laws are very pro-trust. A simple will works if there isn't much money and only one spouse dies and all the assets go to the surviving spouse. Once you start to get assets and have kids a trust in CA provides better tax protection. That's CA in a nutshell.

[KLD313]

A will makes things much easier and it's different than a trust. My dads will stated that a trust had to be made and my mom had to fund the trust to reach the amount specified. Then my mom did her will and she put her life insurance in a trust with me as an owner of the trust, it's irrevocable but she can still change the beneficiaries even though she doesn't own it. I think trusts are more for tax issues and avoiding estate tax where wills spell out what you want to happen with your assets after death.

[Fairy]

Is money safer from people messing with it in a will? Does a trust make it easier to change things because you don't need witnesses?

[nfowife]

Also trust is just for protecting assets. Will is for everything. You would designate guardians for your kids, for example, in your will. And distribute specific items to certain people.