
Private, public natures only one consideration.
LEARN HOW YOUR PLANNED GIFT CAN HELP THE AMERICAN LEGION
Jacqueline Kennedy Onassis was diagnosed with cancer in January 1994. She signed a will in the New York offices of a large law firm on March 22. She passed away just two months later on May 19 at 64.
Because a will is a public document, hers is available on the internet. In the will, she remembered family members and several friends and planned to make a substantial transfer to a charitable lead trust. However, because her two children received the family personal property and promptly sold the items for the unexpectedly large sum of $35,000,000, the residue of the estate was used to pay the estate taxes on this large transfer of value to children, and the charitable trust was not funded.
Bing Crosby passed away on Oct. 14, 1977, with a trust. When his first wife Dixie Lee passed away from cancer in 1952, she had a will that transferred her separate and community property. Crosby was very upset that his financial circumstances were disclosed to the public through the probate process. After marrying his second wife Kathryn, he created several trusts for the children from his first marriage, for Kathryn and for children from his second marriage. He greatly appreciated the privacy benefit of creating a living trust.
You may not have the fame of Onassis or the assets of Crosby (along with Lawrence Welk and Bob Hope, he was one of the wealthiest actors at the time of his death), but you can learn from both of them in deciding whether or not to create a will or a living trust.
When Wills Are a Good Choice There are a number of reasons why a person frequently starts the estate planning process with a will. These include youth, cost, estate size, the ability to transfer assets outside of probate, and a hesitation to select a trustee.
Young and Healthy If you are in your 30s or 40s and have good health, a will is a common starting point for estate planning, much simpler than a living trust. The property subject to a will goes through probate, but that could be many decades in the future.
As you acquire other property, it can be covered by your will. You can modify it at any time, and you save the effort necessary to retitle and track property inside a living trust.
For a young person, the cost savings are significant. Wills frequently cost from $400 to $800, while a living trust may involve costs of $1,000 to $3,500. A young person may be reluctant to spend the funds necessary to create a living trust, but can start their estate plan quite reasonably with a will.
Modest or Moderate Estate A second characteristic of people who choose a will is that they have a modest or moderate estate. As the estate becomes larger and more complicated, a trust is more important. For those with more moderate assets, the will is a good starting point. As the estate grows, they can use some of the increase in resources to add a living trust to their plan.
Using Transfer Methods That Avoid Probate Another option is to create a will but transfer most assets without probate. Your IRA, qualified pension plan, life insurance, and property held in joint tenancy with right of survivorship all avoid the probate process. For individuals who have a modest or moderate estate and are willing to transfer most assets through contract or property law methods that avoid probate, a will is a good solution.
Do Not Want to Select a Trustee With a living trust, it is necessary to select a trustee to manage your property. This trustee frequently will end up managing your assets during the senior years of your life and after you pass away.
Some people do not like this concept. They would rather own the property themselves outright during life and transfer the property outright to family members. For this person, a will is often a preferred planning method.
When a Living Trust is a Good Choice For those individuals who can afford a living trust, it is a good choice. It facilitates management of property during life, protection of the grantor, transfer of assets, and income to family members and management of real estate.
Senior Care What if I become too ill to manage property? One of the concerns you may have is that you may eventually become a senior person with a major illness. For medical reasons, you may be unable to manage your property. A major benefit of a living trust is that you select a successor trustee. If you are no longer able to serve as trustee and manage the property, your trustee can manage your property. They can make certain that the expenses of your medical care or long-term care needs are covered through trust payments.
Larger Estate or Real Estate If you have a more substantial estate, a living trust can have multiple benefits. The trust may include various provisions for handling the management of real estate or personal business interests. Particularly if you have real estate in multiple states, it is advantageous to transfer that property to a living trust. This property can then be managed for the benefit of both you and your heirs.
If you have property in multiple states and pass away with a will, it is necessary to conduct a probate administration in each state where. This entails hiring professionals to manage the probate in each state and considerably increases the total cost. With the living trust, there is no need for multiple and expensive probate proceedings.
Bypassing Probate One of the major benefits of a living trust is that the trust assets bypass the probate process. In most states, this may mean savings in probate costs up to many thousands of dollars.
Not only are there savings in probate costs, but your estate may also avoid the delays that frequently occur in the process. If there are claims against the estate, this can take from two to 10 years. While some large estates have been tied up in probate for many years, other similarly sized estates with a living trust can continue to manage the property and pay income and principal to beneficiaries.
Privacy As Crosby discovered, a living trust is generally a private document, while wills are public documents (the wills of Onassis and many other famous individuals are readily available through internet search sites). Even if a financial institution requests the trust in order to invest property it owns, generally only a small portion is required to be disclosed to the institution. For most purposes, the living trust is private.
Reduced Risk of Estate Contest Larger estates are understandably more vulnerable to a probate contest. When the document and a large estate are public, the target is very tempting. Distant relatives come out of the woodwork to determine whether they have a potential claim.
One of the most disheartening aspects of a will contest is that there frequently are lifelong hard feelings among family members. In many cases, the bitterness is carried by children, grandchildren, cousins, nephews and nieces to their graves.
Because a living trust is a private document and does not have to meet the specific standards for signature and witnesses that are applicable to a will, it is less likely to be attacked.
With a large estate, the living trust is generally safer. In addition, if a senior person needs someone to manage it, the successor trustee has been previously designated. The trustee frequently protects the senior person from potential undue influence of heirs or caregivers. Therefore, the living trust reduces the probability of an estate contest.
The American Legion’s Office of Fund Development offers ways to establish your legacy of support for the organization while providing for your current financial needs. Learn more about the process, and the variety of charitable programs you can benefit, at legion.org/plannedgiving. Clicking on “Learn more” will bring up an “E-newsletter” button, where you can sign up for regular information.
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