Q: Some of my friends have trusts but my attorney hasn't suggested one for me. Which is better, a trust or a will?
A: Like most things in life, it depends on your circumstances and your needs. There is no one size fits all estate plan, and what makes sense for one family may not make sense for another.
Think of it this way, I have a buddy that drives a Prius which gets a gazillion miles to the gallon. On the other hand, I drive a Hummer that gets slightly less miles per gallon. Getting better gas mileage is very attractive to me. However, I have three boys to lug around along with the soccer gear, class projects and tubas that go along with them. Yes, I said tubas.
Both the Hummer and the Prius have their advantages and having a Prius would be great, but it just wouldn't work for my family. Unless of course if they add a rumble seat and a tuba rack.
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The same concept applies to estate planning needs. Some people need a Prius and some people need a Hummer.
A trust's chief advantage is probate avoidance. A properly funded trust should keep your family out of probate.
Also, since a trust isn't generally filed with court, it offers privacy. If it's not in court, people are less likely to find out who is getting your stuff. Privacy is certainly a benefit, as is a reduction in after death expenses and efficiency of transfer of assets.
On the other hand, using a will is usually much less expensive than setting up a trust estate plan. Also, when your open an estate and publish notice, the time period for creditors to file claims is set and is usually limited to a three-month period. Since a trust isn't probated and notice isn't published, creditors have up to nine months to open and estate and file claims. The reduced window that creditors have to file claims can be appealing.
Wills also don't require a lot of work once they are set up. Look at it every couple of years and then put it away. Trusts on the other hand require maintenance to make sure they are being administered properly and are funded correctly.
Both plans have their advantages and disadvantages. However, for most people I think it comes down cost. Are the benefits that a trust offers worth the additional hassle and expense? If the answer is yes, then I think you have your answer.
Opinions are solely the writer's. Christopher W. Yugo is a Crown Point attorney. Address questions to Yugo in care of The Times, 601 W. 45th Ave., Munster, IN, 46321 or to email@example.com. Yugo's information is meant to be general in nature. Specific legal, tax, or insurance questions should be referred to your attorney, accountant or estate-planner.