Wills vs. Living Trusts: Now or Later
This article by Texas attorney Ronald Lipman is a really nice summary of the advantages and disadvantages of living trusts (especially compared to Wills). I've started explaining the costs associated with the two documents in terms of timing:
A living trust has immediate costs -- you pay a little extra now, both in terms of attorney's fees and in terms of work you have to do (transferring assets by changing title and beneficiary designations).
A Will has future costs, which must be paid when you die -- basically, the attorney's fees and court costs associated with probate (including the cost of having your executor transfer assets to the estate and to your beneficiaries).
Which is better for you, a living trust plan or a plain old Will? That's going to depend on your assessment of the above costs. The actual fees are pretty easy to break down, but the intangible costs are more difficult to consider -- when we talk about transfers of assets during lifetime, we're really talking about questions like:
Do you have time to transfer your assets to your living trust?
Do you have the ability to make these transfers yourself (or can someone else, like your financial planner, help with the transfers)?
Can you devote your attention to these transfers, to make sure that nothing is forgotten, and that all assets get placed into the trust?
Do you mind the "hassle" of making these transfers, and the added complexity that a living trust gives to your life?
Answers to these questions will vary among different individuals, which is why a living trust may be a bad idea for one client (an 85-year-old who hates complexity and doesn't want the hassle of asset transfers) and a very good idea for another (a 55-year-old with time and interest to spare on the transfers).
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