The other day I was sitting in conference with another Attorney and a local Judge here in San Antonio for a family law trial. In conference the topic of Trusts came up. Both the Judge and the other Attorney were not believers in Trusts and were in favor of Wills. This perspective is not uncommon so I decided to bullet point the advantages of a Trust over a Will.
Probate - Wills must go through probate, Revocable Living Trust and other Trusts avoid probate. Why is it important to avoid probate? Probate is not there to protect you, it exists to protect your creditors. Your creditors are anyone that may feel they are owed money from your estate. Part of the probate process involves supplying notice to creditors so that they may attached to your estate.
MERP Medicaid Estate Recovery Program - If an individual has received government benefits the government may seek to recover what they have spent on your medical care from your estate after you die. When do they do this? During probate. By avoiding probate your protect your estate from MERP in addition to other creditors.
Cost of Probate - The cost of probate varies from jurisdiction to jurisdiction. In Bexar county expect probate to cost between 4% - 8% if there is no conflict. Conflicted probate litigation is very expensive and the cost of litigation comes from the estate in probate. Because Wills must be probated you incur the cost of the Will and then when you die you incur the cost of probate. The average cost of a will is around $1,500.00 plus the cost of probate (4% - 8% of the estate value). The cost of a baseline simple Revocable living Trust is about $2,500.00, well below the combined cost of a Will and Probate combined (Unless your estate is very small, less then $75,000.00, which includes the value of your homestead).
Strings - When you have a Will it goes into effect when you die and each heir receives their portion outright regardless of their age or mental capacity (so long as they are 18 years old or older). With a Trust you can attach strings so that you can dictate how the assets are handled after you are gone. For example, your daughter June has an issue with drugs and you know that if she received a lump sum of money it would do her harm. You can elect that she receives her inheritance incrementally over time, you can even make a drug screening mandatory before any disbursements are made. Or you can keep the assets in Trust to only be used for June's health, education, maintenance, and security. You can attach almost any rule for the Trustee to follow for disbursement for the benefit of your heirs.
These are just a few of the major benefits you get from a Trust over a Will. There are many more, including tax benefits. Please contact my office to learn more.
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