SHOULD YOU HAVE A WILL OR TRUST?
Frequently we are asked by clients whether they should have a Will or a Trust. This article briefly describes these two estate planning tools and some of the issues raised by the client inquiries.
A Will "speaks" at a person’s death. It is a blueprint for the probate that will follow by designating who will be in charge, his or her authority, formalities to be observed, who will be the guardian of your minor children and who will receive your property. If you don’t have a Will, the state legislature decides these matters for you through the intestacy laws of the states where you live and where you own property, which may be very different from what you desire. If you own property in more than one state, probate proceedings will be need to be conducted in those states as well. A Will cannot avoid guardianship or conservatorship proceedings, and does not provide a method of managing your assets when you reach the point in your life where you cannot manage them any longer.
A Trust is a different way of owning title to your assets and is created by an agreement entered into by a grantor (person who creates the Trust) with a trustee (manager of the Trust) for beneficiaries (people who use and enjoy Trust assets). Many people who create Trusts initially serve in all three positions. When they become unable to manage their assets, the person they have designated as successor trustee takes over. Often this is a gradual process that is facilitated through the use of powers of attorney signed when the Trust is created. People with a Trust still have a Will, which transfers any assets that are not in the Trust to the Trust at the death of the grantor. It is important to transfer all of your assets to the Trust if you want the successor trustee to be able to manage them if you become ill, or if avoiding probate in all of the states where you own property was a goal you had when you created the Trust.
The state and federal legislatures frequently change the laws and tax provisions which affect all of us, including Wills and Trusts. We recommend that estate planning be reviewed whenever there is a significant change in your life or in the law, and at least every five years. In recent years, the Utah legislature has changed and added new laws regarding personal representatives of estates and trustees. Most people do not want some of these rules to apply to them or their family members. However, you must add special language to your Will or Trust to have the law not apply.
