Clients contact us all the time convinced they “only need a simple will”. Now, in lawyer-speak, a “simple will” is a will which contains no testamentary trusts. But this is not necessarily what is being asked for. Often what a client really means by asking for a “simple will” is 1) that they are afraid of what we will charge them for an estate plan but have become convinced they must do something, 2) they really don’t want to contemplate their own death but have become convinced they must do something, or 3) both. Sometimes the pursuit of the simple will is the result of research, deliberation, or based upon the advice of someone else. But regardless, the determination that a “simple will” is adequate is itself a legal conclusion. It may be a valid one, but it should be carefully examined.
First off a primer of sorts. Estate plans fall into two basic camps: 1) will-based, and 2) trust-based. Will-based plans—amazingly enough—center around a will, and trust-based plans center on a trust (usually a revocable or living trust). Of course it can’t be quite that simple, we are talking about the law. So it gets a little confusing. With a will-based plan, the will may contain a trust (called a “testamentary trust”). But the will is the central document and the trust will be public, subject to court oversight, and the whole shebang is destined for probate, etc. And while trust plans center on a trust (sometimes an LLC or Limited Partnership will be used instead), the trust-based plan includes (or should include) a will. But the will (which is usually called a “pour-over” will) is really a ‘safety-net’ of sorts—it is there in case something is outside the trust (like a wrongful death claim) and usually does not require probate. If your head is not smoking yet, there is more on all of this in other places on our website (see Estate Planning FAQs).
Back to the fundamental decision: will-based or trust-based? And if will-based, should it be a simple will or one containing one or more testamentary trusts?
Some people believe that they should not consider trusts because trusts are just a way for lawyers to screw them out of money. Ironically, there are many times that the opposite is true. While a simple will would be less up-front in costs than a trust, in the long run it will frequently cost more. Loss of assets due to delay and inefficiency, increased taxes, administrative expenses, potential litigation, and many other expenses often go with the simple will. If the simple will does not fit the situation in which it is being used, it is actually a very expensive option (though cheap today).
On the other hand, some people believe that they should not consider trusts because they are not rich and don’t need one. This is one of the largest misconceptions in estate planning. While it is true that trusts can provide large savings on tax and probate costs (a potential which generally increases with the size of the estate), trusts are often used to take advantage of many non-monetary goals regardless of estate size.
For example, trusts can be utilized to provide:
1) control over the distribution of assets to heirs
2) protection of those distributions from heir’s creditors and/or spouses
3) peace of mind to loved ones
4) privacy over estate matters (unlike a will, a trust is not public record)
5) protection and preservation of a family-owned business or land, and
6) immediate direction and management if the client becomes sick and/or incapacitated (a will only becomes effective upon the death of the client).
In reality, the decision to utilize a trust-based plan depends on many factors including the client’s health, nature of assets, where they own property, family situation, their unique concerns and goals, etc.
But there are many times when a will works quite well. Even a “simple” one.
So we are back to the simple will. Is it all you need? Maybe. But you can’t make that determination based upon nothing more than the size of your estate. It is simply more complicated than that.
And that is why we offer an initial estate planning session for $150.00. We put that charge toward any estate plan that you request within 60 days of the date of the session. And we will discuss your options, and allow you the opportunity to make an informed choice about estate plans, both will-based and trust-based.
Contact our office now to schedule an initial estate planning session to discuss your particular situation and needs.