Often, estate planning attorneys and clients ask why use a trust as the primary dispositive vehicle when a will could transfer the assets. There are many reasons.
- Incapacity. As we learned in law school, “a will speaks at death.” In other words, it has no impact prior to death. So, even if the will transmits wealth at death, it cannot control the management during life. A Power of Attorney can do so. However, practically speaking, people are much more reluctant to rely on a POA than to transact business with a trust.
- Probate. In some states probate is time consuming and/or expensive. In other states it is less so. However, in almost all states, probate is a very public process. Nosy neighbors can go down to the probate court and see the client’s finances. Some people may not like that. Increasingly, clients are sensitive to the privacy issues. They do not like that the National Security Agency may be keeping their data and they may not choose to make all of their financial data public when there is a good alternative.
As an example of how easy it is to find information about a will, go to the Fairfax County, Virginia courthouse and you can see George and Martha Washington’s wills. Not only can anyone walk into the courthouse and see the wills, they can even go online and see them. Here is a link.
And it is not just the wills of historical figures that are available. Everyone who dies while a resident of a location has their will on file with the local probate court. For example, here is a link to the will of Philip Seymour Hoffman.
With a trust, the terms are private. The assets are private. Some clients may not care about costs or delays after death. However, many of those will care about the privacy. Most of us do not think about how anyone could find out that very sensitive information. Who did they leave their money? How much money did you have? The client will be dead, but their beneficiaries have to live on with everyone knowing their business.
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555
- Double Your Gifting with Spousal Gift-Splitting - January 11, 2022
- Tax Planning for 2022 - December 28, 2021
- Donor Advised Funds: Too Good to Be True? - August 10, 2021