Relevant info: My employer offers a legal services benefit for $15 a month, to which I must commit to for one year. It gives access to attorneys for various services including wills, living wills, trusts, and estate planning. I am not currently enrolled in the benefit.
Anyway, I’ve been doing the Google research and have not come up with a satisfactory answer to the question of trust vs. will vs. both.
Also relevant - kids are grown and self-sufficient. I’m not wealthy but I have a decent retirement nest egg and a home that I own outright. Zero debts.
I gather the main idea of a trust is to avoid probate. Is that a concern for a regular schmoe such as I?
You should have a will because it will make things a lot easier and smoother. If nothing else, it states who the executor is and that person can get started immediately rather than relatives having to go through the probate office to have one assigned. Also, it can avoid a lot of infighting between relatives during the disbursal of the estate.
Lots of kinds of property and assets can have beneficiaries assigned to transfer ownership upon death outside of any will or trust. You can transfer your house with a Transfer On Death Deed. Your bank and investment accounts can have beneficiaries assigned and they will transfer to the person or persons you list. So lots of those kinds of assets can be handled outside of the estate and wouldn’t need to be part of the will.
The other assets like the stuff in your house, your cars, etc., would need to be in your will or trust and so you could assign them to whoever should get them.
If you care about your relatives getting along through this process, make everything very clear and specific as to what your wishes are and who gets what. It’s surprising how big arguments can be over relatively worthless items once sentimental value gets involved.
I don’t know if you need one or not (IANAL), but if you do and your company’s legal service will pay for it, you should take advantage of it. Setting one up can easily run into the thousands of dollar.
I agree with all of this, but will extend the last paragraph - make things clear, but also tell everyone why you are giving what to whom (while you are still alive). My dad did me a lot of favors in this process, but not telling me and my brother a few things left it to me to have to speculate, and led to difficult circumstances with my brother. The TOD (Transfer On Death) my dad arranged with his retirement investments over-ruled a prior will my brother brought to the table.
Anyway, my wife and I have a trust with all our assets in it. It is something that needs to be maintained, but contains the will as well as power of attorney and EOL instructions. Our near-adult kids know where the binder is, and everything is in one place (which is another benefit of the trust).
As I found out the hard way after my parents passed without a trust. In California, any estate worth over $100,000 (that’s one hundred thousand) must go through probate, even if there is a will. Any house anywhere in CA is going to exceed that threshold. Probate fee is set by law, non-negoitable, at 4.1% of the estate value. I would have been thrilled if my parents had spent $180 for this type of benefit instead of having to fork out over $15,000 for a lawyer to say “yep, no claims against this estate, here’s the title to your house”
That experience is the reason I signed up for my company’s similar benefit this year. I’m making sure to create a will and trust before 2020 ends.
It looks like the legal numbers have changed since 2011 - Estate value is now $150,000, which is still absurdly low if a house in California is part of the estate. Probate fees are on an incremental scale, but still start at 4% and work down.
This is SO important. Talk to a lawyer in your state (and any other state in which you own real estate or other significant assets). Probate law varies tremendously from place to place, and generic advice may not be applicable to your specific situation and jurisdiction. For example, somebody upthread mentioned Transfer on Death deeds, which are really useful if your state recognizes them. In twenty-plus states, however, a TOD is a useless piece of paper with no legal effect. Meanwhile, a dozen or so states allow you to make a transfer-on-death designation on your car’s title, so the vehicle doesn’t have to go through probate.
It’s been a year since I first posed the question of will vs. trust. I have just signed up for the benefit of legal counsel so that is now in play.
But I don’t believe my original question was answered. I am going to get a trust for sure, but do I also need a will? Or does the existence of a trust obviate the need for a will?
And now that I have access to an attorney is there any other business I should be taking care of?
I have both. I think most people in California with trusts also have wills. Not everything you own is in a trust, so whatever isn’t needs to be considered in the will.
Our estate attorney did both at the same time. I think the fees cover both.
Since you have access to a lawyer, why not ask him/her that question about whether you need both and why?
I’m in a similar spot - I own my house plus a rental, sizable retirement fund, no obvious heirs (no spouse or children). I have it written out who gets what, but I don’t have a lawyer to draw up a will. My company offers some legal services, but I’m not sure what it entails. I’ve previously stated that one niece gets my farm, since she’s agreed to care for my animals for the rest of their lives, but she’s since married and her wife already has a farm. It would be a load off my mind to have it written down.
The one thing I told my mother is I wouldn’t be her executor unless she met with all my siblings to explain what her will entailed and why it was the way it was. I told her, “You’ll be dead, but they’ll be my siblings for the rest of our lives. I don’t want anything to hurt our relationships.” She did that, and it made it much easier on me.
Here are two recent threads on point. I suggest you read them both.
My wife is a now-retired estate attorney. Simplifying my several contributions to those threads, you don’t “need” to do anything, but you really, really ought to do some planning. But putting that into effect may not be as complex or expensive as what you hear about wills, trusts, etc.
By failing to plan you’re deliberately planning to make your kids’ lives harder and more expensive (perhaps vastly more expensive) than need be. It’s a loving gift to not do that out of a childish squeamishness about the reality of eventual death for us all.
Ask the attorney what is needed. At a minimum, I would think drawing up health care powers of attorney, with an alternate, as well as a general power of attorney (to handle bill-paying, etc. if injury or illness incapacitates you) would be a good idea.