Do You Need a Will or Trust in Utah?
In my previous posts, I have discussed various tools that are available to help you accomplish different tasks. For example, I have discussed the importance of selecting “back up parents” for your young children should something happen to you, and outlined the important documents everyone should have (to save you time, they are a healthcare power of attorney, a financial power of attorney, a living will and a trust or will). This article will discuss the difference between a trust and a will.
One of the most important factors in determining whether to have a will or trust is the value of your estate and income. Individuals with a high net worth typically have more complex goals – such as tax planning, charitable giving, or complex distributions – than do individuals with lower incomes.
As you probably already know, a will is a legal document that provides for the distribution of your assets and provides for other wishes for your representative to follow. Often we hear of strange last requests, such as Harry Houdini requesting a séance be held each year on the anniversary of his death, or see crazy bequests in movies (I’m still waiting for a client who wants to create a will similar to Rupert Horn’s in “Brewster’s Millions”).
However odd or crazy someone wants to be in their will, it is a must-have document for individuals and couples with young children (under 18 years old) because as mentioned above, they appoint back up parents to raise your children. If you don’t have a will and something happens to you and your spouse, your families may argue over who raises your children. It can be expensive, time consuming, and frankly, ruin family relationships if you don’t pick a guardian for your kids.
In addition to the appointment of a guardian for your children, your will should also provide a trust for your children. Doing so will allow your assets to be managed by a trustee who will make distributions for your children’s needs (often for such needs as health, education, food, clothing and shelter, and other support). More discussion of this type of trust will come later. For now, it is important for you to know that this type of protection can be given to your children through a will.
Typically a trust is more complex than a will. Unlike a will, a trust becomes effective immediately upon its creation and signing. It is also different from a will as it can be used to avoid probate. In order for this to occur, a trust must be funded, meaning all your assets must be re-titled into the trust (any real property, bank or other investment accounts, etc.). Additionally, a trust also creates a certain level of privacy because it is not filed with a probate court.
Typically you (and/or your partner) are the trustee of your trust when it is first created. Upon your death or disability, your trust will designate a successor trustee, who will oversee the trust assets and make payments and other distributions based on the terms of the trust.
Like a will, a trust may have specific provisions which may be odd or crazy. Often these are less publicized because they are not public information. However, a trust may require more upkeep than a will – as you acquire new assets you will be responsible to make sure they are titled correctly.
There are other important factors to consider when choosing whether to create a will or trust. I would invite you to set some time aside to come in and discuss these factors and choose which document is important to accomplish your specific goals.