You Can't Take it With You: Where Will Your Assets Go When Your Gone?
(part 4 of a 4 part series)
WILL V. LIVING TRUST - WHICH ESTATE PLANNING VEHICLE IS RIGHT FOR YOU?
Wills and living trusts each have pros and cons. You should discuss these with your estate planner to determine which is right for you and your assets. Here are a few things to consider:
A living trust requires more work and expense on the front end than does a will. In other words, you have to do much more than pay the attorney's fees, which are typically more for a living trust than for a will, and execute the trust documents. Specifically, any asset that you wish to pass through the trust must be transferred into the trust. If this transfer does not occur, the asset cannot pass through the trust to your heirs. In that event, a probate estate will need to be opened before the asset(s) that fall outside the trust can be distributed to your heirs. If you have a "pour-over" will, the asset will be "poured-over" into your trust. Nevertheless, someone will still have to go through the trouble of opening a probate estate.
If your heirs and/or the person you want to "wrap up" your estate after your death are located outside the state in which you reside, a living trust may be the more convenient choice. This is because the person who will be responsible for disbursing your trust estate (i.e. the successor trustee) does not have to appear in court and obtain "letters testamentary" in order to have access to and control over the assets and property owned by the trust. Furthermore, it is not necessary for a successor trustee to hire an attorney to assist him/her with handling the trust estate unless the trust document requires such. (However, it is recommended that a successor trustee should consult with an attorney prior to taking any actions as successor trustee.)
Living trusts also provide for privacy. For example, if you do not want the general public to have access to the documents that name your heirs and what you are leaving them, you may want to consider creating a living trust. Living trust agreements do not become part of the public record as do wills. In order to be probated, wills must be filed with the appropriate court clerk's office, thus becoming part of the public record. So, if privacy is a concern, you would want to choose a living trust
Living trusts are also more difficult to contest than are wills. So, if you expect your heirs to go to battle over what has been left to whom, a living trust might prevent that from happening.
Probating an estate IS NOT always a long, drawn out process in the State of Tennessee. Sure, there is a statutory creditors' period that has to elapse before a probate estate can be closed, but this is a matter of months, not years.
Probating an estate DOES NOT result in the State of Tennessee or the federal government being entitled to "take" more of a deceased's estate. Although there are court costs and filing fees associated with probating an estate, the State of Tennessee and the federal government do not get to "take" from any estate, whether it be a probate estate or a trust estate, unless the deceased or his/her estate owes them money (e.g. Medicaid/TNCare reimbursement, Tennessee or Federal Gift Taxes, Tennessee Inheritance Taxes, Federal Estate Taxes, Federal Income Taxes, etc.).