Although many people equate estate planning with having a will, there are many advantages to a trust rather than a will as the centerpiece of your estate plan. Only a trust provides comprehensive management of your property in the event you can’t make financial decisions for yourself (commonly called legal incapacity) or after your death. In other words, a trust gives you control and security in your life and after.
A common reason to create a trust is to provide ongoing financial support for a child or another loved one who may never be able to manage these assets on their own. Through a trust, you can designate someone to manage the assets and distribute them to your heirs under the terms you provide. Giving an inheritance to an heir directly and all at once may have unanticipated ancillary effects, such as disqualifying them from receiving some form of government benefits, enabling and funding an addiction or encouraging irresponsible behavior you don’t find desirable.
Furthermore, if you ever become incapacitated your successor trustee — the person you name in the document to take over after you pass away — can step in and manage the trust’s assets, helping you avoid a guardianship or conservatorship (sometimes called “living” probate). This protection can be essential in an emergency or in the event you succumb to a serious chronic illness. Unlike a will, a trust can protect against court interference or control while you are alive and after your death.
One of the primary advantages of having a trust is that it provides the ability to bypass the publicity, time and expense of probate. Probate is the legal process by which a court decides the rightful heirs and distribution of assets of a deceased through the administration of the estate. This process can easily take several months to more than a year to resolve.
There can be extraordinary fees for probate as well, the amount for which a personal representative (who is not a lawyer) is set by Nevada Revised Statute. It is a sliding scale based upon the gross amount of the estate (thus, if you have a home that is valued at $300,000 even if you have a mortgage of $275,000, the $300,000 is used). In addition, there will be attorney’s fees discussed within the Revised Statute.
So who should have a trust?
- In general, if the gross value of your assets are worth $100,000 or more, you should strongly consider creating a trust;
- If you have a spouse or children for whom you want to provide;
- If you own a home or other real property;
- If you own a business;
- If you want to have control over your property and your body if you become incapacitated;
- If you want to avoid the, likely, thousands of dollars in costs if your estate has to go through probate.