Most adults have thought about who to give their possessions to after they die. According to Caring.com, almost 33% of adults in the United States have a will.
Many people might think a will is the only kind of estate planning document available to them. But Barbara Bellin Janovitz, attorney at Reminger, and Gary Zwick, partner with Walter Haverfield LLP, both in Cleveland, said filling out a living trust may be more valuable than filling out a will.
One reason Zwick said a living trust is superior is the avoidance of probate court. Probate court is the court-supervised distribution of a deceased person’s assets. This process can take weeks or even months.
“(Avoiding probate) is generally a good idea,” Zwick said. “That way you don’t have to wait for six months to go by. To see the creditor, they have to be paid. You don’t have to go through the court and hire a lawyer to take you through the court to transfer the assets if they’re already in a trust. When you die, then it’s a simple matter of replacing the trustee and moving on.”
Janovitz said having a revocable trust instead of a will would allow a person to sign it while they’re still alive and designate the beneficiary on their bank account to be the trustee of the trust at their death.
“If I do that, when I die, we don’t have to use the will,” Janovitz said. “There isn’t a probate asset. That bank account is paid directly to the trustee of my trust, who can then distribute it without having the court supervise it ... it’s also generally faster to distribute property under a trust, because you don’t have to jump through the various hoops and time delays that you do when you have assets that pass under a will.”
Zwick warns people should look out for a few common mistakes when signing a living trust. Depending on a person’s circumstances, Zwick advises against leaving wealth to family outright. Meaning after an individual dies, and their beneficiaries reach a certain age, property goes out of the trust and into their hands.
“It is better for it to be kept in trust for them and let them be their own trustee,” Zwick said. “And the reason why is because your kids, grandkids and whoever you’re related to, you don’t want your money that you’ve given them to go to a divorcing spouse or to their creditors. Or if they happen to be wealthy, you don’t want to add to their problems, like estate planning problems.”
Janovitz said it is also important to coordinate titling of assets in a trust.
“You sign the trust agreement and a good attorney will walk the client through all the decision points, just like they would in a will,” Janovitz said. “Who should get your property? What if that person dies before you? Do you want to put restrictions on when they get the property? At what age do they get the property? Who should manage the property until they make the distribution? A well-crafted trust will cover those provisions.
“That’s what someone’s paying an attorney to do –
to understand what the issues are and to walk the client through and help them make those decisions. That’s the value that the attorney brings, sit with the client, go through a sort of list of questions and help them make good answers.”