Hello, I have a wife and two children. We have a home with a mortgage payment. I have been getting mixed advice on whether a Will is enough or if I should do a Trust. The major drawback I hear from people that are against Wills is probate. What is probate? How much will getting a Trust cost? If you do recommend a Will, do you believe the online companies that do Wills can be enough? Thank you in advance.
This comes up all the time, and I can only speak for myself living in Cal.
#1: probate is a court ordered process to ensure there are no debts or minor children. [Yes, that’s simplified but covers the prime issues]
#2 probate atty’s – but mostly clerks – spend months searching for same. [in Cal, average is 11 months but can be years]
#3 Meanwhile the house remains empty, a target for vandals and squatters.
#4 Ave cost of probate [in Cal] is $13,500 but can be more.
#5 My Trust cost $2,100 [in Cal]
#6 Death cert is submitted by heirs and property transfers to them in a few weeks.
Some here disagree but that’s my experience.
You’ll hear lots of horror stories.
I suggest you first find out what probate with and without a will is like in your state. Would your executor/administrator be required by law to hire a lawyer? That’s extra $$$ and time for the probate process. If not required, would they want to have a lawyer do it, or are they willing to handle it themselves (much cheaper)? If your executor resides in another state, what happens then? What are the laws of intestacy (which relatives get what if you die without a valid will)? If you don’t like those laws, you can make a will so that your assets will go where you want them to.
A trust would avoid the probate process and keep your affairs out of the public record. A trust would also allow your successor trustee to take over if you become incapacitated before you die. You would have to pay a lawyer up front, then retitle everything you own into the name of the trust. Your successor trustee would have to get copies of the trust document naming him/her as successor trustee, along with your death certificate, in order to transfer assets to heirs after your death.
My dad had a trust, mom had a will, brother died without anything, all 3 lived in separate states, and I lived in a 4th and handled their estates. Mom’s probate cost the most because I had to hire a lawyer (required by law). The cheapest was my brother’s probate, even though his was the most complex. They all took about the same amount of time for me to settle – less than a year. I did not find probate to be bad, or the trust any better.
Take your time, do your research, don’t listen to the horror stories, and do what’s best for your situation.
So very true! This is why I continued to note Cal [for me] and other states have different rules.
Probate is the court proceeding to settle the estate. Since it involves courts and lawyers, it can be expensive. It’s also a public proceeding. Wealthy people tend to not want the publicity that comes through probate.
It’s pretty hard to tell whether you need a trust to avoid probate based on what you’ve given us. It’s going to depend a lot on your state’s rules, as well as the amount and location (i.e., type of account) of your assets. All your retirement accounts and life insurance should avoid probate already, so long as your beneficiaries are set properly. Some states have rules for “small” estates, which have a shortened or simplified probate.
You can provide a lot more rules in a trust than in a will, so if your kids are young, a trust can be helpful in carrying out your wishes. A trust will be more expensive to set up than a will. You may save money in the end, however.
I don’t recommend an online company to do a will. You won’t ever know if it’s done right, and your heirs will only learn whether it’s done right after it’s too late to fix it.
Sounds like I have some research to do. I think I’m the long run, I’m going to consult an attorney since they know what they are talking about and I don’t with this. Thank you.
The situations you need to be most concerned about are
- if something happens to BOTH you and your spouse at the same time, and thus your children will need guardians, and financial support as they grow up, and
- ensuring your assets are passed to those you choose.
Regardless of whether you have a trust or not, your debts must be paid before inheritances are passed on. In most cases, if you have a young family, you should have term life insurance.
Are you certain? With a will, yes, but with Trusts and financial accounts?
I just got term insurance. I’m good with that. Good points. Thanks.
I just got finished settling my parent’s estates and curse the day they let a fancy lawyer talk them into a Living Trust.
Yes. Those are debts tgat were owed by tge decedant. Just as if you owe a debt, and have no funds except in an IRA, 401K, a trust or similar, the debt still exists.
I understand and agree.
But you said inheritances cannot be paid until debt is cleared. I’ve never heard of that…
My heirs need the funds to pay any debt.
Yes, in probate, debts are paid first.
I would think the successor trustee would be responsible for dealing with any debts prior to the remains of the trust going to the heir(s).
Makes sense. My heir is the trustee.
Why? What were their assets like? In general terms of course.
May father had a net worth of about 3 million and my mother about 5.5 About a third of assets were real estate. The biggest hassle was finding a lawyer that would take the house out of the trust to put it in my name.
Did they not have an accompanying will for the trust?
Isn’t the point of a trust to carry out the wishes of the person who created it?
Wouldn’t tampering with that original intent be a tad risky for any lawyer?
Didn’t the Trust specify how the house would be handled? One big reason for a Trust is to handle property
The will specified the Trust assets would be divided equally. It was up to us siblings as Trustees as to who got what. One of the complicating factors was the attorneys that drew up the trust did not want to take me on as a client, and would not fool with real estate transfers either. And few real estate attorneys want to touch property in a trust. In the end I found one.