* This article is written with Illinois laws in mind. The reader should contact an attorney in their state to determine the best course of action.
Many people still think that trusts are only for the Mitt Romney's of the world, but every day more of the mainstream public realize that many people can use a trust -- especially Revocable Living Trusts. That's because Revocable Living Trusts can provide a family with privacy while saving them valuable money and time by avoiding the probate process.
I believe that Revocable Living Trusts are a fantastic tool in estate planning, there are still cases where a person may only need a will-based estate plan, and that is what this article covers. Following are instances that may indicate that you don't need a revocable living trust. Of course, you should still see an estate planning attorney to go over your individual circumstances.
Sidestepping probate is a large goal in estate planning, although sometimes it makes sense -- such as to collect debts. Many assets avoid probate by being transfer-on-death property or by being jointly held. These pass upon the death of the individual, and therefore avoid probate. That leads us to the first step in deciding if a will-based plan will suffice.
1) If you have less than $100,000 in personal property in the probate estate, you may only need a will-based estate plan. As previously mentioned, probate can cost you lots of money and can a very long time. Details of your estate is also available in the public record, so you have no privacy. Because of this many families see that the cost of a revocable living trust makes a lot of sense because it can save time and money. What do smaller estates do? Well, Illinois allows estates with $100,000 or less in personal property to file a waiver after the decedent's death and skip probate. Therefore, if you arrange your estate so that most of the items pass immediately at death, or if you simply don't have assets close to $100,000, a will-based plan can still avoid probate and the drawbacks associated with it.
2) If you have minor children you should AT LEAST have a will-based plan so that you can specify who you want their guardian to be in the event that you and the other parent die. Courts look to your will for specifications on this choice when they make the decision to appoint guardians. Also, if you have property that will go to the the child, a will can specify that the management of the property should be done in conformity with the Uniform Transfers to Minors Act (UTMA) until they become "adults." If the UTMA rules are sufficient to the custodian's management of child's property, a will with a UTMA provision can suffice. If more customization is required in directing the custodian on financial matters, a trust may be more appropriate.
3) If you are not concerned about people learning details about your estate, a will-based plan can do the job;
4) If you don't have a large life insurance policy a will-based plan may work adequately. You may be thinking, "the policy has a beneficiary and should pass outside probate right, so why does policy size even matter?" That is correct thinking when it comes to probate avoidance, but the Federal government considers the entire estate, including transfers at the time of death. If the policy would cause the estate to exceed the federal personal exemption amount you should consider using something other than a will-based plan.
Consider the situations listed above when deciding whether a will-based estate plan could work for you. The best thing to do is talk to estate planning attorney in your state.
Many people still think that trusts are only for the Mitt Romney's of the world, but every day more of the mainstream public realize that many people can use a trust -- especially Revocable Living Trusts. That's because Revocable Living Trusts can provide a family with privacy while saving them valuable money and time by avoiding the probate process.
I believe that Revocable Living Trusts are a fantastic tool in estate planning, there are still cases where a person may only need a will-based estate plan, and that is what this article covers. Following are instances that may indicate that you don't need a revocable living trust. Of course, you should still see an estate planning attorney to go over your individual circumstances.
Sidestepping probate is a large goal in estate planning, although sometimes it makes sense -- such as to collect debts. Many assets avoid probate by being transfer-on-death property or by being jointly held. These pass upon the death of the individual, and therefore avoid probate. That leads us to the first step in deciding if a will-based plan will suffice.
1) If you have less than $100,000 in personal property in the probate estate, you may only need a will-based estate plan. As previously mentioned, probate can cost you lots of money and can a very long time. Details of your estate is also available in the public record, so you have no privacy. Because of this many families see that the cost of a revocable living trust makes a lot of sense because it can save time and money. What do smaller estates do? Well, Illinois allows estates with $100,000 or less in personal property to file a waiver after the decedent's death and skip probate. Therefore, if you arrange your estate so that most of the items pass immediately at death, or if you simply don't have assets close to $100,000, a will-based plan can still avoid probate and the drawbacks associated with it.
2) If you have minor children you should AT LEAST have a will-based plan so that you can specify who you want their guardian to be in the event that you and the other parent die. Courts look to your will for specifications on this choice when they make the decision to appoint guardians. Also, if you have property that will go to the the child, a will can specify that the management of the property should be done in conformity with the Uniform Transfers to Minors Act (UTMA) until they become "adults." If the UTMA rules are sufficient to the custodian's management of child's property, a will with a UTMA provision can suffice. If more customization is required in directing the custodian on financial matters, a trust may be more appropriate.
3) If you are not concerned about people learning details about your estate, a will-based plan can do the job;
4) If you don't have a large life insurance policy a will-based plan may work adequately. You may be thinking, "the policy has a beneficiary and should pass outside probate right, so why does policy size even matter?" That is correct thinking when it comes to probate avoidance, but the Federal government considers the entire estate, including transfers at the time of death. If the policy would cause the estate to exceed the federal personal exemption amount you should consider using something other than a will-based plan.
Consider the situations listed above when deciding whether a will-based estate plan could work for you. The best thing to do is talk to estate planning attorney in your state.
About the Author:
Nick Wroblewski is a Chicago estate planning attorney and managing partner of law firm Windy City Esquire, Ltd. If you are an Illinois citizen, you should contact an estate planning attorney to discuss ideas and possible strategies that can be used to protect your wealth. You can also learn more about Illinois estate planning on his blog.
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