Are Trusts better than Wills?

by | Aug 4, 2017 | Uncategorized

Steve and Jodie Aguilar have four basic estate planning options:  1) Do nothing; 2) Wills; 3) Joint tenancy; and 4) Revocable Trust (also known as a Living Trust). When the Aguilars sit down with an estate planning attorney, they will learn that Wills, by themselves, in New Mexico, do not avoid a probate proceeding.  They will also learn that there are several pitfalls to using joint tenancy as an estate planning device. Although the Aguilars have heard about Trusts, they have questions.  What is a Trust?  Should everyone have a Trust or are they better for some people rather than others?  In order for a Trust to work as planned, what commitments are required of the Aguilars? What is a Trust? A Trust is a method to hold title to your assets in one “basket”.  A Trust is a title holding device by written agreement.  Title to your assets is held in trust and, therefore, is not affected by death.  Assets titled in the Trust avoid probate.  The Trust can be easily amended.  You will have complete control of your assets.  When you die, resign, or become incapacitated, a person, named by you, will take over as Successor Trustee.   Should everyone have a Trust or are Trusts better for some people than others?  While Trusts have some extra benefits for some groups of people, almost everyone should consider a Trust. Trusts avoid probate and provide family with convenience, reduced cost, and privacy. Anyone wishing to put their affairs in order in a way to avoid a probate and thereby reduce (but not eliminate) the time and expense of administering their affairs after death should consider a Trust. A Trust administration is a private proceeding. A probate is a public proceeding. Several circumstances in which a Trust may be beneficial are:
  • Real estate in more than one state. If you own property in more than one state without a Trust, your heirs will have to do a probate in each of the states where you own property.
  • Family member with special needs. Trusts are particularly helpful when providing for family members with dis-abilities or special needs.
  • Children of different marriages. A Trust agreement is well suited to provide for children from previous marriages and alleviate conflicts between children from different marriages after you die.
  • Large estates. A Trust can minimize estate taxes and increase the amount of assets which pass to your heirs.
  • Remarriage late in life. A Trust keeps ownership and management of assets separate from a subsequent marriage.
In order for a Trust to work as planned, what commitment is required? For the Aguilars to receive the benefits of a Trust, they should sit down with an estate planning lawyer and understand how the Trust works, help the lawyer title their assets in the name of the Trust, and place title to any new assets they acquire in the name of the Trust.  They should also call or set appointments from time to time with their estate planning attorney to make sure their assets are titled properly and to amend the Trust when there are changes in their life or affairs.After doing their homework, the Aguilars will conclude that, for the significant majority of people, doing a Trust is a better way to put their affairs in order than a Will.