While it can be difficult to confront your own demise, setting up an estate plan is important to ensuring that your wishes are followed and your loved ones taken care of after your death. There are many estate-planning vehicles available to you, but two of the most common are wills and trusts.
There may be a simple way to do a job. Unfortunately, for each simple method there is often a far more complex way of completing the work. It is not that some people like overly complex solutions. The reality is that simple solutions work for simple problems, and complex ones have a tendency of solving ever more complex problems. In estate planning, this dynamic is most often encountered in the question “do I need a revocable living trust or can you do it with a last will alone?"
If you have found yourself between these horns of dilemma, the simple will and the (sometimes) complex trust arrangement, then you will want to consider a recent Forbes article titled “Wills vs. Trusts: What's Best For Retirees?”
There is a debate and for good reason. The last will can be simple, and everyone needs one even when they have settled a revocable living trust (i.e., commonly known as a “pour-over will”). Even with a “simple” last will, a period of probate is required and there may be some adverse tax implications. However, this is less likely these days with the federal estate tax exemption pegged at $5.34 million (but do not forget to check state estate taxes that may apply).
A revocable living trust arrangement can move assets very efficiently outside of the probate process. That said, trusts are not as simple as signing on the dotted line. In reality, revocable living trusts must be regarded as a new legal entity to maintain. It must hold title to your assets now, or upon your death to do its work outside of probate. It takes effort, and sometimes the dedication of resources, to achieve these complex goals.
In the end, it will always come down to your needs, the needs of your family, and the nature of the assets to leave behind. However, the question is very real and worth asking: do I need a revocable living trust or can you do it with a last will alone?
Properly answering this question, given your own unique circumstances and objectives, is not a do-it-yourself project. Consult competent legal counsel regarding how each approach may (or may not) be appropriate for you.
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning
Reference: Forbes (February 18, 2014) “Wills vs. Trusts: What's Best For Retirees?”