comparison of wills & trusts: holt 5-9-2012

Wills & TrustsA Comparison

Holt Community Education

Thank you for joining us today! A few things to note before we begin:

The presentation and written materials provided today are intended for educational use only and do not constitute legal advice.

While I encourage you to ask questions, please keep in mind that you have no expectation of privacy or confidentiality in the information you may choose to share in class.

Jo Anne HindsAttorney at Law

Will Terminology

A Will is formally known as a Last Will & Testament.

If you are signing a Will, you are known as a Testator.

The person you ask to settle your estate with a Will is known as the Personal Representative.

Trust Terminology

A trust is governed by a Declaration & Agreement of Trust.

If you are signing a Trust, you are known as a Settlor.

The person you ask to settle your Trust is known as the Trustee.

Terminology Review

Last Will & Testament Declaration & Agreement of Trust


Testator Settlor

Personal Representative Trustee

Last Will & Testament

A Last Will & TestamentTells the Probate Court:

- who you are

- who your natural heirs are

- who will raise your kids if cannot

- who should settle your estate

- who should receive your estate and how it should be divided

Trust Agreement A Well-Drafted Trust

Agreement States:

- who you are

- who is responsible for administering your trust

- who receives your trust estate, at what time & for what purpose

- anything else the trustee might need to know to do his or her job

Comparing by Cost

Wills generally cost less to prepare, but much more to administer after death.

Trusts generally cost more to prepare, but usually less to administer after death.

Costs with a Will

Preparation – in many cases a will is easier to prepare, so attorney fees to prepare a will are less.

Filing for safekeeping with court – current cost is $25 per will.

Probate after death for typical estate - $150 filing fee, inventory fee of +/- $1000, certified copy fees, attorney fees ($2500 - $10,000 or more).

Costs with a Trust

Preparation – attorney fees will be 3-4x higher, or more

Trusts are not filed with the court for safekeeping, but can be registered (not common).

Administration after death for typical trust – NO filing fee, NO inventory fee, NO certified copy fees, attorney fees ($0 - $10,000 or more, but generally much less than with probate).

Cost Review


Attorney Fees to Prepare Generally Less

Attorney Fees to Prepare Generally 3-4x More

$150 Probate Court Filing Fee at Death

NO Probate Court Filing Fee

$12 x ? Certified Copy Fees

NO Certified Copy Fees

+/- $1000 Court Inventory Fee

NO Inventory Fee

Attorney Fees to Administer Generally Higher

Attorney Fees to Administer Generally Less

Purpose of a Simple Will

Set forth evidence of competence.State burial/cremation wishes.Nominate personal representative.Nominate guardian and/or conservator

for children who may be minors at parent’s death.

Make gifts of cash/personal property.Direct payment of claims.State beneficiaries of remaining estate.

Purpose of Declaration & Agreement of Trust

Confirm existence of trust.Confirm rights reserved.Nominate successor trustees.Set forth rules for using trust assets.Make gifts of cash/personal property.Direct payment of claims.Direct distribution of remaining trust,

including contingent gifts.

Exclusive Purposes

Exclusive to Will Exclusive to Trust

Setting forth evidence of competence

Confirm existence of trust

Statement of burial/cremation wishes

Confirm rights reserved

Nominate personal representative

Nominate successor trustees

Nominate guardian for minor children

Set forth rules for using trust assets, including making contingent gifts

To create a Will, you’ll need to supply some information about yourself and your family.

Some law firms will request that you complete a fill-in-the-blank form about your wishes.

A Trust Agreement Takes A Little Extra Work

You’ll typically do more work to SET UP a TRUST than you would with a WILL.

You’ll gather information about your assets, so that your trust can be funded.

You may have to visit your banks, credit unions, and other financial institutions to “fund” or “transfer” your assets into your trust.

You can now do some of the work online.

Be thorough. Double-check to make sure each asset has been correctly funded to the trust.

You don’t lose control over the assets in your trust – in fact, with a typical revocable trust, you’ll be serving as your own trustee for your competent lifetime.

So… for example, when you go grocery shopping, you are using your powers as trustee to expend trust funds for your benefit.

And there are no limits!

You can change banks or financial advisors, you may sell your home and buy a new one – or even sell your home and travel the world, spending every last dime.

Just because your assets are held by a revocable trust doesn’t restrict your ability to do what you please with your assets during your lifetime.

If you are unable to care for yourself, your successor trustee may take over the role of administering the trust for your benefit.

The Timeline IllustrationUnderstanding the Role of Potential Documents in Your Estate Plan

Today Incapacity

Death

For this illustration, let’s say that we are meeting to sign some typical estate planning documents today. On the timeline, you’ll see three points:

1. today, 2. a point representing the possibility of your

incapacity,3. and death.

Today Death

LIFETIME


POST-DEATH

Incapacity


Document: Last Will & Testament

Use: the probate process is a “notice” system requiring delivery and filing of paperwork within strict timelines set forth by the court, an inventory fee is charged by the court based upon the value of the assets passing through the probate process.

Today Death

LIFETIME


POST-DEATH

Revocable Living Trust

Incapacity


Document: Revocable Living Trust

Use: effective immediately when created, but dependent upon trust funding to accomplish its objectives.

holds ownership of assets to avoid probate, provides additional control over assets, reduces costs & stress on surviving family members

Today Death

You Create & Fund TrustTrustee Administers for YOU

LIFETIME

Trustee Administers for OTHERS

POST-DEATH

Revocable Living Trust

Incapacity


PR Stands in YOUR Legal Shoes

Environmental Impact

Probate of Will (Notice System) = More Paperwork

Administration of Trust = Less Paperwork

More frequent, heavier mailings to more people

Less frequent, lighter mailings (or email)

More printing, copying, filing

Less printing, copying, filing

More paperwork clogs up an already busy court system

Courts typically not involved

My Role as Your AttorneyI offer guidance and advice on how to accomplish your plan.

I advise you of the consequences of your choices, offering you alternatives when appropriate.

I prepare documents which simply, accurate and thoroughly accomplish your plan.

The traditional style…

JO ANNE HINDS REVOCABLE LIVING TRUST NO. 1

JO ANNE HINDS, currently residing at 999 MAIN STREET, ANYTOWN, MI 49999 hereby makes and establishes this revocable living trust, to be known as the JO ANNE HINDS REVOCABLE LIVING TRUST NO. 1 DATED APRIL 21, 2012, reserving unto herself the exclusive right to amend or revoke the trust at any time during her lifetime, with JO ANNE HINDS as Settlor (hereinafter referred to as“SETTLOR”) and JO ANNE HINDS as trustee (“TRUSTEE”), for the purpose of providing asset management assistance during the lifetime of Settlor and to effect the distribution of the trust estate upon Settlor’s death.

…vs. writing trusts for today

Declaration and Agreement of TrustJo Anne Hinds Trust

1. My name is Jo Anne Hinds. My address is 999 Main Street, Anytown, Michigan 49999.

2. I am the creator of this trust. Under Michigan law, the creator of the trust is known as the “Settlor.” I also serve as the initial trustee of my trust.

3. The name of my trust is the Jo Anne Hinds Trust.

4. The date of this trust agreement is April 21, 2012.

5. I may change (amend) or cancel (revoke) my trust at any time during my lifetime, as long as I remain competent.

6. I create this trust agreement to provide my trustee with instructions about how to manage my trust during my lifetime and how to administer my trust and distribute my assets at my death.

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Thank you!

Thank you from Jo Anne Hinds 18 Years Experience Advising Families Like Yours