What are the differences between wills and trusts and what makes one desirable over the other? As with most legal questions the answer on what is desirable depends on your individual circumstances.
Wills are generally less expensive than creating a trust. A will is a much less complex document for a lawyer to prepare. A will directs what will happen with your material possessions after you die. It says who gets your money and property and tells the court the person you want put in charge of it. Without a will, the State of Oregon determines who gets your property and the court could appoint almost anyone to be in charge of your estate after you die. You should also realize that even if you create a trust, your attorney will usually also draft a will for you called a “pour over will.” This is a will that takes care of any property that is for some reason not part of your trust. So, creating a trust does not necessarily mean that you will be able to entirely avoid probate. For more information on probate, click here.
If a person does create a trust and is able to manage that trust very well, it may be possible to avoid probate. Avoiding probate does appeal to some people for various reasons. There can be benefits of avoiding taxes; providing more easily for the immediate needs of minor children; maintaining privacy; and giving you greater control of what happens to your estate.
In Oregon, one of the situations that make a trust a wise tool to use is if a person has accumulated money or property in value of more than a million dollars. At that value, when a person dies the estate is subject to Oregon estate taxes. At an even greater threshold, federal estate taxes are also applicable. If that estate has been transferred to a trust prior to death these particular taxes can be avoided.
It is also possible, depending on what other planning has been done, that a trust would benefit a family with young children. If parents die without a trust, all of their estate goes through a process known as probate. The process takes an average of 10 to 12 months in Polk, Marion, Linn, and Yamhill counties. This can mean that the orphaned children of such a family would not have access to their parents’ financial resources for that long or even longer. A trust would allow children, and the people caring for them, the benefit of family money immediately.
In most cases if you are able to avoid probate you are able to maintain a greater level of privacy. Probate requires that the value of the estate and particulars related to heirs and information regarding some kinds of property to be filed with the court. A court case file is a record that is made available to the public.
A trust can also give a person the ability to direct how money or property will be managed and benefit a person’s survivors in a way that a bequest in a will may not be able to achieve.
It is impossible in a post like this to tell you what the best option is for you. Please contact an estate planning attorney to get advice for your particular situation.
Stan Butterfield is a probate lawyer that also does estate planning. He maintains an office in Dallas, Oregon. Stan practices in Polk, Marion, Yamhill, and Linn counties. If you believe Stan may be able to be of assistance to you please call—(503)623-2427.