CNBC reported that 67% of Americans live without an estate plan. There is no singular explanation for why people avoid it, but several common themes exist.
- I don’t have enough assets. (You have more than you think.)
- Everything will go to my wife, so I don’t need one. (What happens when your wife passes away?)
- I am too young to think about it. (Everyone faces the possibility of incapacitation regardless of age.)
- It is too uncomfortable to think about. (That doesn’t relieve you of being a responsible adult.)
Many people change their stance when they have a loved one who passes away without a will or a trust. They have a firsthand account of the mess it leaves behind, and they grasp the importance of having a plan. After a cursory internet search of estate planning, they may ask their attorney the following questions: Do I need a will or a trust? If I need a trust, what type of trust do I need?
Which One Do I Need?
The odds are that you need both a will and a trust, but it is impossible to answer that without understanding your circumstances and what you want to achieve through your estate plan. However, we encourage you to look beyond that basic question and begin seeing the value of a revocable trust. Frankly, it is a superior document and is the better path for most families.
If we just stated that we couldn’t tell you what you needed without knowing you, why are we suggesting that you create a revocable trust? Because the majority of people who have realized the power of an estate plan have children that are minors, they need to protect their assets, and they want it done quickly and easily.
The Benefits of a Revocable Trust
Your life is going to change. You may have other children, go through a divorce, or someone could pass away unexpectedly. Revocable trusts can adapt to your change in circumstances because you can modify them. (This is exponentially easier when you have an established relationship with an estate planning attorney who knows you.) In contrast, if you opt for an irrevocable trust, you give yourself fewer options due to their rigidity.
Irrevocable trusts take assets away from you. If you are wealthy, you may have the option to leave $100,000 or some other large sum to an irrevocable trust for someone else’s benefit, feeling comfortable with the knowledge that you will not need that money during your lifetime. If you are in a position to do so financially, there’s nothing wrong with having that money tied up in an irrevocable trust. However, the average American family will not want to lose access to a large sum of money just to gain asset protection. You must remember that upon your death, your beneficiaries will have asset protection with a revocable trust because creditors cannot attach themselves to that money.
Therefore, revocable trusts give you flexibility, asset protection, privacy, and affords you the benefit of no court invovlement with your trust administration.
Wills require court involvement. Knowing that irrevocable trusts have their drawbacks, another issue to consider is why not have just a basic last will and testament? Although a basic will plan can work for some families or invidiudals, they always have the draw back of court invovlement. This inevitable means delays, additional costs, and fees. Speaking to an experienced estate planning attorney about all of the pros and cons of a will is important before deciding to proceed with just a will for your estate plan.
Finally, it is important to remember that wills always have a place in your plan. If you have a revocable trust, you will still need a will if you want to appoint a guardian for your minor children. You also will want to have a will to ensure your trust is properly funded. The goal is to not have to use the will to fund your trust, but it should be there just in case it is needed after your death.
Build a Flexible & Reliable Estate Plan with Select Law Partners, PLLC
At Select Law Partners, PLLC, we recommend to everyone over the age of 18 that they should have an estate plan. Although we have gone over why a revocable trust is an excellent estate planning tool that works for most families, we will build the right plan for you. Contact our North Carolina or Virginia offices today to schedule your consultation with one of our experienced attorneys.
Sara Josey
Latest posts by Sara Josey (see all)
- How Virginia’s Transfer-On-Death Deeds Work - September 13, 2023
