Will verses Trust for inheritance ?

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Simple question: What do you prefer for inheritances for your adult kids...

Will verses Trust for inheritance ?
Give your reason(s) why you like one better than the other.
 
A trust can go on long after you pass, while a will creates an estate which must wind up and end with all assets passed out to those to whom you leave them. A will "speaks from the date of death", but estates can't stay open forever. You can use a will to start a trust if you wish... a "pour over trust". (The will pours money into the trust. There are tax ramifications with respect to how you do it. Not a simple question after all. A few bucks spent with an estate planning professional can save more of your assets for those you want leave those assets to.
 
We have a trust; after speaking with a lawyer and accountant who is familiar with not only tax rules but also the inheritance laws in our state. I advise that you get professional, local advice.
 
AMd you can have a "spendthrift trust" which limits how many new BMWs little Jimmy can buy aand wreck in a year.
 
The answer is: it depends. How large (or complicated) is the estate? Trusts are more expensive to create (and amend) than a will, and come with lots of rules to follow for the trustee(s) if it remains in force after a death to manage any portion of the trust for a beneficiary. Are all of the adult children well grounded, hard working people? Are they married, unmarried; any of them (or grandkids) with special needs?

I have now handled four estates in our family as personal representative. All of the people that passed (mother-in-law, father, mother, brother) had trusts in place, and it made things much easier. Fortunately, my parents trust had the framework for a Special Needs Trust for my brother who recently passed, as well as a follow-on trust for his son. I say fortunately because the 21 year old nephew has around a 9th grade education. In this case, the trustee manages the money until he turns 35. Without a trust amendment made before my father passed, I would have handed over a large chunk of money to the nephew.

A 30 minute consult with a family law attorney would point you in the right direction. It could be that a simple will is fine for now, but a trust may make sense 15 years down the road (after that lottery win!). Whatever you decide, don't forget to update the document periodically as things/heirs change.
 
I believe that a trust has already gone through probate so there is less delay in many cases; a will has to go through the court system.
 
Trusts are overrated. If you have a special needs kid or something like that it's worthwhile. Wealthy people have need for trusts usually because they tend to have lives that are complicated in ways that don't involve tax. Thanks to the plutocrats who run our country you won't pay a dime on the first ten million bucks inherited, (with marital exclusions) so that's not an issue.

There is this advantage to a trust: if you own real estate in more than one or two states, a trust saves you the expense of doing a satellite probate in the different states. Probate isn't a huge expense anymore, but it is a pain, so there's that.

A will on the other hand has the advantage of an extra short statute of limitations in most states. So, if you are the type to grope your caregiver in your dotage, or you are still trying to be a structural engineer at age 87, its a consideration.

Consult a lawyer and all that, but the basic answer is to not make a trust unless there is a real reason.
 
OP: There are many details specific to you that might make one better than the other. It's difficult to give a blanket statement, so my recommendation is to consult a professional estate planner or lawyer. The small fee you pay now might save your family significantly more in the future.



Originally Posted By: Doog
I will give all of my property to my kids long before I die. That way I avoid the taxation.


It's worth running that by a professional. Tax laws are interesting to say the least, and depending on specific situations there might be better ways to handle it.
 
Good advice here so far, I helped my mom set up all of her finances last year. We worked with a financial advisor and local lawyer. The costs were pretty reasonable and we know everything is setup correctly.

As for death taxes....the limit is $5.34 million. If you are under that there really isn't much consideration. If your worth more than that then I hope you are already talking to professionals!
 
I plan to give everything to my kids before I die so they avoid inheritance tax.

In Britain there are no taxes applied to money won when gambling - all ill need to do is go all in on a hand of poker and the entire legal procedure is circumvented.

40% inheritance tax?! I don't think so!
 
We set up trusts because we have a blended family and don't want an adult child getting their entire share until they've reached the age of 35.

Deeded our home to a trust to protect each of our children should their parent pass, etc. My life insurance pays a percentage to my daughters trust and a percentage to my wife for her to do with as she pleases. Ditto with hers. Ditto for my 401(k).

The only thing not in trust is personal property such as clothes, cars, etc. Cars are co-titled at this point. Bank accounts are set up with survivorship as well. oilBabe has some funds inherited from her father and have been kept in an account solely hers so she can pass that to her children.

Things get more complicated with blended families, that's for sure.
 
Trusts are typically the way to do it, but you need to spend some money and consult a professional. Everyone's situation and needs are different.
 
My parents do have a Will and I am listed as:
Joint Tenant with Right of Survivorship on all financial accounts.

Can this be challenged in court by a sibling cut of of their Will ?
 
Originally Posted By: Mr Nice
My parents do have a Will and I am listed as:
Joint Tenant with Right of Survivorship on all financial accounts.

Can this be challenged in court by a sibling cut of of their Will ?


Any legal document can be challanged. I would think it would be difficult to challange the Joint Tenant with rights of survivorship.Make sure all these are legitimate. Make sure you have the latest copy of the will. Your lawyer should also have one. Don't cheap out. Get a lawyer ahead of time and agree on his fee. I assume you are the Executor?
 
Originally Posted By: Olas
I plan to give everything to my kids before I die so they avoid inheritance tax.

In Britain there are no taxes applied to money won when gambling - all ill need to do is go all in on a hand of poker and the entire legal procedure is circumvented.

40% inheritance tax?! I don't think so!



So you're going to go play poker with your kids and lose on purpose. Brilliant!
 
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