Wills and Trusts: Seniors Need to Know Their Estate Planning Options
When considering estate planning, for yourself or a senior loved one, it’s important to understand how wills, revocable living trusts and other estate planning tools work. Each has differences that are important to know. The recent passing of Lou Reed, lead singer of the band The Velvet Underground, is a clear illustration of a few of the important differences.
After his death in October 2013, Lou Reed relied on a 34-page will he signed in April 2012 to distribute his assets among his immediate family — and Reed had a lot of assets to distribute — more than $30 million. Why Reed chose the use of a simple will over a trust or other more complicated estate planning tools for such a large estate is unknown, but the results are clear, as outlined in a recent Forbes article. Because Reed chose a will, the media, the music industry, and every single fan could figure out how much money was left to each of his heirs. And that alone (privacy) is a solid reason to consider avoiding the use of a will. As Forbes reports:
“If Lou Reed had used a revocable living trust, and transferred his assets into the trust during his life, then all of this information would have been kept private. No one would know how much he had, whom he left it to, or how much his executors were charging. That’s a key difference between wills and trusts. Wills have to pass through probate court to work, which is a public process. Trusts, when used the right way, avoid probate court entirely.”
In addition to the privacy concern, avoiding probate court is a solid reason to consider a revocable living trust. Probate court can be expensive, time-consuming, stressful, and more prone to family fighting. It’s easier to file objections or challenges to a will in probate court than to a trust. Also, trusts can help you when you’re alive by addressing who and how your assets are managed if you are no longer able to do so. However, don’t disregard the fact that establishing a revocable living trust involves more upfront effort and expense than creating a will.
So, in the end, it really becomes a personal decision dependent on your particular finances and family situation. Not every one of us will have an estate worth $30 million, but it’s none the less important to know ones estate planning options.
This article does not address all the intricacies associated with wills and living trusts. Consulting with a competent attorney can help you make the right decision. See the Alternatives for Seniors Legal Services Directory for help finding an Elder Law Attorney.
BLOG Date: Thursday, July 31, 2014
Writer: Ryan Allen