Wills vs. Trusts – Which to Choose?
Wills vs. trusts is hotly debated in lots of estate planning circles. It is actually a legitimate debate. There are lots of will vs. trusts issues that are big among the lawyers, but the public is really confused.
Too many of the public think that a trust and a will – are both the same. The public’s opinion on the will vs trust debate is based on the one side they listen to first. They never get both sides of the debate, so the will vs. trusts debate never gets a fair hearing.
What’s in The Wills vs. Trusts for Financial Advisors?
The insurance dudes, estate planning gurus, and other “promoter types” all push the living trust. In order to make a living trust really work, it has to “own” all of your assets. That means you have to transfer all of your existing assets into the living trust.
If you are going to make the transfer, you’ve got to inventory all of your assets. You have to figure out how they are currently owned, and then make the transfer. During this process the “professional” gets a chance to see your portfolio in its full naked view.
Of course your “professional” will have a lot of suggestions as to what you should do to invest your assets better and how much life insurance you need to protect all of your wealth, should you die.
To these “professionals” the wills vs. trusts debate is just a way to get you to open your Kimono and let them look at your naked portfolio. If they were to ask to see your naked portfolio otherwise, you would tell them to drop dead.
Unfortunately, if seeing your portfolio is the motivation behind recommending a living trust, you’ll get a slapped together, one-size-fits-all trust. The lawyers just scored their points in the living trusts vs wills debate.
The slapped together trust isn’t going to do you any good. First, the trust probably isn’t written well. Second, the trust is just a worthless piece of paper, unless you know how to use it. Nobody ever teaches you how to use the trust.
If you get a bad trust document and/or you never “use it,” you have wasted your money. The lawyers are right. You probably would have been better off just getting a cheap will.
The Attorney’s Side of Will vs. Trusts
On the flip side of the coin, there are attorneys, the insurance industry, and financial planners (the “professionals”) who argue that the legal system wants to “set you up” with a will so they can drain the estate in the probate process.
There is some, if not a lot, of truth to that argument. Probate has been “streamlined” in many states, but somehow lots of attorneys never got the memo. They take advantage of the family when Dad or Mom dies. (I’m sure you find that hard to believe.)
Every time a family gets soaked in the probate process, the will vs. trusts debate rages on. There is no question attorneys will unnecessarily run their clock and soak the family for a lot of money in the probate process. They will let the probate process drag out for years, when it could be ended in weeks or months.
Please understand when it comes to will vs. trusts, not all “professionals” and attorneys take advantage of you. However, wills, living trusts and probate are emotional issues. Death of a family member is a time when the family is particularly exposed.
Independent of the will vs. trust issues, there are a lot of “sharks” that swim around and prey on families that have suffered the loss of a loved one.
You Must Understand the Will vs. Trusts Battle
In my book, Protecting Your Financial Future, I review the wills and living trusts and other legal tools to help you choose the legal tools you need. Trusts are neat legal devices. Wills are required in every estate plan. Probate is a legal tool that can be used to your advantage in many cases. You need to understand both sides of the living trusts vs. wills debate. You need to make sure you know what needs to be done and control your advisors – don’t let them control you.
Lee R. Phillips, Counselor United States Supreme Court
© Copyright 2012 LegaLees Corporation
All Rights Reserved
