A Last Will & Testament (later referred to as the “Will”) directs the disposition of a person’s assets after their death. The detailed provisions of the document are drafted after an extensive and meaningful conversation between the attorney and the client to determine the client’s wishes and the objectives to be obtained such as tax considerations, providing for a spouse, children, grandchildren, charitable gifting, among others. Upon the client’s death ( no longer called the client but rather called the decedent), the Will is filed with the Court along with a Petition For Probate signed by the proposed Executor and a filing fee paid to the Court.
The Court’s filing fee is determined by the estimated value of the estate. The Court assigns a file number and all documents filed with the Court are contained within that file. The Court’s file is open to the public and may be accessed by anyone.
Although the Will names an Executor, it is the Court that appoints the Executor after considering the Probate Petition and various other documents required by the Court. Often the process outlined here is not terribly complex and this is the most advantageous approach for the decedent to have taken. But there is an alternative to be considered. That alternative is the Revocable Trust. A Revocable Trust has nothing to do with Medicaid or Medicaid planning.That is a discussion for another day.
A Revocable Trust is a trust set up for the client’s benefit during his or her lifetime and upon the client’s death or disability, provides for a successor Trustee. The Trustee follows the mandates
of the trust document in managing and distributing the trust assets without the oversight of the Court. During the client’s lifetime the Revocable Trust can provide for the incapacity of the client
without the need for Court intervention (appointment of a Guardian). It is not a public document and therefore provides anonymity with respect to its terms from the public including potential creditors.
Well if its that simple why doesn’t everyone use a Revocable Trust instead of a Will? The answer is that the appropriate document is determined by the wishes and objectives of the client as well as the client’s stage of life and business activity. The preparation of a Will is relatively inexpensive when compared to the cost of creating the Revocable Trust. However, the probate of a Will is often significantly higher than distribution of the Revocable Trust assets.
When you execute a Will, you put it away in a secure place making sure someone else knows where it is for use after your death. A Revocable Trust, once created, should now be “funded” to avoid the probate process. This means that you have to transfer assets into the Trust. Because it is a Revocable Trust and has been created for your benefit, you will not lose your power to control the Trust assets, but there can be significant time and cost associated with re-titling assets in the name of the Trust.
If the client is at a stage of life where their assets are established such as a home, stock investment accounts and bank accounts, then a Revocable Trust may be a good device. For the younger client or the client that is buying and selling assets, participating in business entities and the like, then the Revocable Trust may not be the best option.
Revocable Trust documents have become very popular recently. People ask for them without knowing what they really are. Whether a Last Will & Testament or a Revocable Trust is right for you and your family can only be determined after consulting a qualified attorney.
Howard M. Katz, Esq.