Will vs. Trust

Many times clients will ask what the difference is between a will and a trust, and why someone with a few hundred thousand dollars would want a trust.  Some recent clients are perfect examples of why I feel that for most situations, a trust is preferable to using a will or beneficiary designations in Missouri.   This couple had no children, and had a fairly simple plan of distribution, in equal shares between several cousins.  They were interested in making a charitable donation, but only if their estate exceeded a predetermined amount. Additionally, all of the cousins live out of state.   In this case we have three options:

1) Use a will as the primary tool to pass the assets down.  This will enable us to allow a third party to handle the administration, so as not to burden any of the out-of-state heirs with selling the house, etc.  It will also enable the family to make their charitable contribution on their terms.   The problem is that with the will, we will have to pass the assets through probate, which will diminish the estate by at least 3%, and more likely 6%.   This amounts to over $20,000 in this situation!

2) Use beneficiary designations as a way to avoid probate.  This will avoid probate, but there are several obstacles that make this undesirable.  First, all of the heirs will have to consent, and participate in the sale of the home and liquidation of assets after death.  Additionally, it will be virtually impossible to get the charitable donation right if there is any sudden change in assets.   This is really not a good plan to ensure their wishes are followed.

3) Use a living trust.  In this instance, we get the best of both worlds, because we will still get all of the advantages of the will (the ability to use a 3rd party to administer the estate, detailed plan of distribution, charitable contribution made) AND we get to avoid probate.   It is true that the initial legal work will be a little higher, but this process will cut the costs of administration by roughly 75% after the death of the survivor.  In addition, we now have a process in place the will ensure proper management of the assets if one passes away and the survivor is unable to manage finances, etc.

Written by:

Michael C. Weeks, Attorney

The Elder Law Firm of Beck and Weeks, P.C.

2777 West Clay St. Charles, MO 63301