If you have not looked into the subject thoroughly, you may automatically assume you should use a last will as an estate planning device. Many people do go this route, but you should be aware of the fact that you have other options. A last will is not going to be the best choice in many instances.
Let’s look at some of the reasons why you may want to use a trust instead of a will.
A last will must be admitted to probate. This is the legal process of estate administration, and the heirs to the estate cannot receive their inheritances until after this process has run its course. In a case that is not especially complicated, an estate may pass through probate in around nine months to year.
Plus, there are expenses that accumulate during probate, and it is a public proceeding that allows anyone to find out how you decided to distribute your resources.
If all of these drawbacks do not sound very appealing, you could avoid them through the creation of a revocable living trust. The trustee that you name in the trust declaration would follow your instructions after you pass away and distribute assets outside of probate.
Estate Tax Efficiency
People who have been especially successful from a financial standpoint could face estate tax exposure. On the federal level, the exclusion is $5.43 million in 2015. If the value of your estate exceeds this amount, you must take steps to gain estate tax efficiency.
A last will would do nothing to reduce your tax burden, but there are trusts that could be used to ease the pain.
There are litigious types out there, and they’re always looking for targets that have something to take. For many, asset protection is a priority. A last will would not protect assets from creditors or claimants, but there are trusts that can be used for asset protection purposes.
Medicare does not pay for long-term care, but Medicaid will assist with these expenses. Since Medicaid is a need-based program, you cannot qualify if you have considerable assets in your own name.
If you maintain direct personal possession of your property and arrange for its transfer through the terms of a will, you would not be able to qualify for Medicaid. On the other hand, you could choose to convey assets into a Medicaid trust, and these assets would not be counted against you by Medicaid evaluators.
Schedule a Free Consultation
We can help if you would like to learn more about the value of trusts. Our firm offers free consultations, and you can send us a message through this page to set up a free consultation: Smithtown NY Estate Planning Attorneys.