Who needs a trust INSTEAD of a will here in Cincinnati? That might be a trick question – do you know why? So first, let’s define a will and then a trust, and I’ll ask you, what do you think?
WHAT IS A WILL?
According to the American Bar Association, “A will provides for the distribution of certain property owned by you at the time of your death, and generally you may dispose of such property in any manner you choose. Your right to dispose of property as you choose, however, may be subject to forced heirship laws of most states that prevent you from disinheriting a spouse and, in some cases, children. Your will does not govern the disposition of your property that is controlled by beneficiary designations or by titling and so passes outside your probate estate. Such assets include property titled in joint names with rights of survivorship, payable on death accounts, life insurance, retirement plans and accounts, and employee death benefits. These assets pass automatically at death to another person. Your Will is not applicable to them unless they are payable to your estate by the terms of the beneficiary designations for them.”
WHAT IS A TRUST?
According to Ohio State University, “A trust is a legal relationship. Unlike a corporation, a trust is not considered to exist as an entity separate from the people that own it and control it. A trust is created when it is signed, or it can be created orally. It can be funded anytime. In a trust, assets are entrusted to a trustee who holds legal title and manages the assets until they are distributed to the eventual beneficiary. The terms of the trust describe how income from the assets and principal are to be distributed and managed. The trustee can be a bank, a trust company, another professional, or one or more family members (spouse, son, daughter, or self).”
These two legal instruments are both elements of a solid estate plan (including others such as a Living Will and Healthcare Directive), and both have great value. But one does not replace the other. Yes, you can have one without the other, but why would you? When it comes to your loved ones, don’t you want to make sure to protect them and make things as easy as possible for them when you die?
IF YOU DIE WITHOUT A WILL
You know, if you die without a will, which is called dying intestate, your heirs might have a hot mess on their hands, depending on your assets, number of heirs, creditors, etc. The State of Ohio could step in and, in the absence of a will, sometimes make decisions about who gets what based on reasons that you might not have agreed with. Do you really want to leave it up to the state to decide who gets your vintage Corvette or even your home?
IF YOU DIE WITHOUT A TRUST
If you die with a will but without a trust – well, the situation may or may not be complicated, again depending on your assets, heirs, etc. What a trust CAN do for you that a will CANNOT is to help minimize probate issues and potentially reduce costs and taxes to your loved ones after you’ve passed on. Plus, a trust can help you while you are still alive; a will only takes effect after your death.
HOW WOULD A TRUST HELP YOU DURING YOUR LIFE?
Great question! One significant way is that having your assets in a trust can help protect them should you become incapacitated. Again, a will is of no value in this regard.
TRUST OR WILL?
So to my way of thinking, the original question, Who needs a trust instead of a will in Cincinnati? is a trick question. The bottom line is that EVERYONE should have a will, and a significant number of individuals would benefit from having a trust as well. I hope that clarifies things.
If you decide to get your affairs in order or update your will or trust, I’d be honored to help you. Please call me at 513-399-7526 or visit my website, www.davidlefton.com. If you want a bit more information on wills and trusts, check out my page www.davidelefton.com/services/