Wills are simple documents, easy to read and understand, usually running only a few pages. They may also be the least expensive way to ensure that the assets you leave behind are dispersed per your wishes. For these reasons, regardless of the size of your estate, you should have a will prepared.
A will allows you to:
- Nominate guardians for minor children.
- Appoint an executor.
- Designate the specific responsibilities granted to the executor.
- Outline a plan for property distribution.
- Provide alternate beneficiaries in the event a named beneficiary predeceases you.
- Provide for payment of debts and allocation of estate taxes.
A trust is a legal arrangement that provides directions for the future management of specific property and other assets, and names the beneficiaries. It also designates the trustee who is tasked with carrying out the instructions outlined in the trust document.
Trusts may have different purposes and restrictions. One of the most common is a “living trust” to manage your assets while you are still alive.
Whatever the circumstances, either put in place while you are alive, or meant to be used upon your death, you can use trusts to:
- Avoid probate.
- Care for a surviving spouse.
- Look after minor children until they reach a certain age.
- Attend to children and family members with disabilities and special needs.
- Oversee assets for persons who are financially irresponsible.
- Provide for management and investment of assets.
Trusts will not necessarily eliminate estate taxes, but may minimize them. Whether you will realize any actual reduction depends on:
- The combined net worth, if you are married, of you and your spouse.
- Whether the trust is drafted specifically to irrevocably hold life insurance or qualifies as a charitable trust.
- The year you, and your spouse, die.
To successfully minimize estate taxes, you should consult a knowledgeable attorney like those at Sitterley, Vandervoort & Davis Ltd. who can analyze your specific estate planning needs.
Wills vs. Trusts
So, should you have a will or a trust? There are many things to consider when making this decision.
Privacy. Unlike wills that are recorded in a court house and subject to public view, the description, terms, and value of a trust can only be accessed by those designated in the trust document or as required by the Ohio Trust Code. If you are concerned about keeping the details of your estate private, go with a trust.
Control of assets for children. When assets are left to a minor child in a will, the guardian controls them until the child reaches age 18, or the will can delay that until age 25 under the Ohio Transfers to Minors Act. Trusts have a clear advantage over wills if you want assets controlled past the age of 21.
Real estate outside of Ohio. If a second home or other real estate is located outside of Ohio, a trust may prevent a separate probate proceeding in the other state.
Speed of transfer. Distributions according to a will may be made as early as three months after it is filed. While there is no similar waiting period applicable to trusts, it is not necessarily prudent for an executor or trustee to distribute assets without carefully determining if all of the decedent’s debts are paid, and without fulfilling all estate tax requirements.
Costs. The drafting of a will generally cost much less than the drafting of a trust, and there are often additional costs when transferring assets into a trust after it is established. Probate Court costs are only about $150 to $225, with executors entitled to fees, which are set by statute. Trustees are entitled to similar fees, but family members who serve as executors and trustees often decline to charge for their services.
Probate Court. Wills have to go through probate. One advantage of the trust is the elimination of the filings and procedures of the Probate Court. We estimate that having a trust will result in a 25% decrease in the cost of legal assistance. This may prove to be a significant savings for larger estates.
The Ohio Trust Code (OTC), passed by the Ohio General Assembly in 2006, has improved and modernized administration of trusts. Whether your estate is settled by probating a will, or through trust planning, you should seek legal assistance. At Sitterley, Vandervoort & Davis Ltd., we have attorneys certified by the Ohio Bar Association as specialists in Estate Planning, Trust, & Probate law. They understand OTC guidelines, and can answer your questions and guide you through the process.
Should you have a Power of Attorney?
Yes, it allows you to designate an adult who can assist you with all of your financial affairs in the event you are unable to manage them yourself.
Should you have a Health Care Power of Attorney?
Yes, it allows you to designate an adult who can assist you with all of your medical affairs in the event you are unable to manage them yourself.
Should you have a Living Will?
Yes. If you become incapacitated, a living will, signed by you, means you have made the decision that doctors should not prolong your life if you are permanently unconscious or terminally ill.