About Estate Planning
At CVEP, we highly encourage our clients to choose a Revocable Living Trust as their estate planning choice.
WHAT A REVOCABLE LIVING TRUST IS
A Revocable Living Trust is a legal document that allows someone to control their assets and property while they're alive, and to designate who will receive them after they die. The person who creates the trust is called the grantor. And the person receiving the assets is the beneficiary.
As the name suggests, a living trust is revocable during a trust maker’s lifetime so that in the event of a divorce, as an example, the trust can be revoked.
A significant benefit of a revocable living trust is that immediately upon the trust being created and funded it begins to provide a mechanism and instructions for the care and support of the clients should either of them become mentally or physically incapacitated.
Our firm’s trust package includes a “pour-over” will. This should not be confused with a will drafted as your primary estate planning device. A pour-over will is a very simple document that a trust maker would not expect to be probated except where the trust maker failed to transfer a valuable asset into his or her estate planning trust, so it’s just a precaution, a backup document.
A revocable living trust is the preferred choice of most clients as their primary estate planning device once they understand the flexibility it offers as their personal situation changes over time, and some of its other key benefits.
WHAT A WILL IS
A Last Will and Testament is the alternative primary estate planning device that clients should consider. Normally the preparation of a will requires less attorney time because it is a simpler document, therefore a will should normally be less expensive than a revocable living trust. Keep in mind, however, that each individual person must have their own separate will whether married or not, while a married couple can do their estate planning with one revocable living trust under which they are both the trust makers.
The terms of a will only become legally effective upon the death of the maker of the will and the subsequent admission of the will in a public probate court proceeding. Thus, the additional cost of a probate down the road should be considered in making the choice between a will and a revocable living trust as one’s primary estate planning device.
There are instances where a will makes sense. For smaller estates where complex tax planning is unnecessary, a will is adequate to transfer one’s assets upon your death to your chosen beneficiaries. Unlike a revocable living trust, a will makes no provision for the care and support of the client or clients if they become mentally or physically incapacitated and unable to make and carry out decisions concerning use of their personal assets for their own care and welfare. So, if you select a will as your primary estate planning device you should consider a will package, which includes a durable power of attorney, so that you have at least some protection from the risk of your own physical or mental incapacity later in life. And, while the maker of a will is allowed to name a guardian for their minor children in their will, to earmark funds from your estate for the support, maintenance and education of minor children or incapacitated adult children or perhaps financially irresponsible adult children in the event of your incapacity or premature death, then you should have trust provisions in your planning document that provide for that scenario. While such trust provisions could theoretically be contained in a will, the additional attorney drafting time would make such a will equivalent in cost to a living trust, so you should choose the revocable living trust we offer if any kind of trust provisions are required in your estate planning.
“Apples to Apples” Comparison of a Revocable Living Trust to a Will as Your Primary Estate Planning Device:
Question 1. Is the estate planning document able to make provision for the care and support of the client in the event of the client’s own physical or mental incapacity later in life?
Revocable Living Trust: Yes. A revocable living trust becomes operative upon creation and funding of the trust e.g. right away, while you are still alive! Your trust’s provisions should specify an alternative trustee, normally your spouse if you are married, to continue to act as the sole trustee or to act as the alternative trustee if you become incapacitated and unable to make decisions about your own care and support.
Will: No. A will is only legally effective and operative after your death and after a public probate court proceeding has been filed by your executor and the court has ordered your will be admitted to probate!
Question 2. Is the estate planning document able to make provision for the care and support of either (i) minor children, or (ii) mentally or physically incapacitated adult children or (iii) financially irresponsible adult children, upon the client’s death or mental or physical incapacity later in life?
Revocable Living Trust: Yes. A revocable living trust becomes operative upon creation and funding of the trust e.g. right away, while you are still alive! The provisions of a revocable living trust can anticipate and provide for contingencies such as the risk that you become mentally or physically incapacitated or die, yet still have (i) minor children, or (ii) mentally or physically incapacitated adult children or (iii) financially irresponsible adult children, who will need immediate care and support from your estate.
Will: No. A will is only legally effective and operative after your death and after a public probate court proceeding has been filed by your executor and the court has ordered your will be admitted to probate! And, while the maker or a will is allowed to name a guardian for their minor children in their will, to earmark funds from your estate for the support, maintenance and education of minor children or incapacitated adult children or perhaps financially irresponsible adult children in the event of your incapacity or premature death, then you should have trust provisions in your planning document that provide for that scenario. While such trust provisions could theoretically be contained in a will, the additional attorney drafting time would make such a will equivalent in cost to a living trust, so you should choose the revocable living trust we offer if any kind of trust provisions are required in your estate planning.
Question 3. Does the estate planning document provide privacy to the client and heirs concerning the client’s wealth and estate planning choices?
Revocable Living Trust: Yes. A revocable living trust is a private client and family document that normally will not be subject to public disclosure, such as in a probate proceeding. No probate court proceeding is necessary upon the deaths of either of the spouses to allow the living trust to continue directing the trustee in the management and distribution of the trust property and its income.
Will: No. A will is only legally effective and operative after your death and after a public probate court proceeding has been filed by your executor and the court has ordered your will be admitted to probate! Court proceedings, including probate court proceedings, are normally matters of public record accessible by anyone, and they can be the subject of inspection by investigators and news reporters.
Question 4. What is the relative cost of a revocable living trust versus a will?
Revocable Living Trust: Normally costs more than a will. Normally the preparation of a will requires less attorney time because it is a simpler document, and therefore a will should normally be less expensive than a revocable living trust, however, keep in mind that each person must have their own separate will while a married couple can do their estate planning with one revocable living trust under which the clients are both the trust makers. The terms of a will only become legally effective upon the death of the maker of the will and the admission of the will in a public probate court proceeding. Thus, the additional cost of a probate down the road should be considered in making the choice between a will and a revocable living trust.
Will: Normally costs less than a revocable living trust. Normally the preparation of a will requires less attorney time because it is a simpler document, and therefore a will should normally be less expensive than a revocable living trust, however, keep in mind that each person must have their own separate will while a married couple can do their estate planning with one revocable living trust under which the clients are both the trust makers. The terms of a will only become legally effective upon the death of the maker of the will and the admission of the will in a public probate court proceeding. Thus, the additional cost of a probate down the road should be considered in making the choice between a will and a revocable living trust.
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A significant benefit of a Revocable Living Trust is that immediately upon the trust being created and funded it begins to provide a mechanism and instructions for the care and support of the clients should they become mentally or physically incapacitated.