Of Wills and Trusts

Recently participated in a discussion where an older gentleman was reviewing his estate papers, and was wondering if — in addition to a will — he should also set up a trust.  Specifically, a living revocable trust, since one of his children had been pushing for it based on watching the Suze Orman show.

Personally, I just don’t see the need in most cases.  Most people have modest estates with wills that clearly express their desires.  That should be enough to properly and fairly settle the estate and transfer the assets according to the deceased’s wishes.  An irrevocable trust is more appropriate for very large estates (>$5 million), or those where privacy is paramount.  A will is a public document, whereas a trust is private.

A will goes through court-supervised probate whereas a trust does not.  This is supposedly one of the advantages of a trust.  But probate is a fairly routine court activity; it’s not a big deal.  Furthermore, a trust has its own costs.  At UBS we offer this service to customers, as do peer banks and estate lawyers.  Any of these will charge a trust establishment fee.  There will also be a maintenance fee to keep the trust up and running and complete any necessary filings.  Finally, when you create the trust you must put assets in the trust.  At that point, the assets are no longer yours– they belong to the trust.  Certainly, in a revocable trust you can reverse course and take back the assets, but there is both time and cost associated with those actions.

My general rule of thumb is this:  if you are not sure if you need a living revocable trust, then you almost certainly do not.

–Tim Shields’, UBS

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