Will vs Trust: Which is For Me?

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Often when I meet with a new client to prepare an estate plan the client walks in the door believing that she needs a trust.  When asked why she would like a trust, the response is often to avoid probate because she has heard that probate is very expensive.  However, when the pros and cons of a trust are discussed with the client, in most cases the client decides that a will is a more suiting instrument.  Unless there are specific reasons to create a trust, most of the time a well-drafted will is sufficient. So who wins in the battle of Will vs Trust?

What is Probate?

At its most basic level, probate is the process by which a decedent’s estate is administered.  When assets of the decedent are titled in her name (i.e. a home, a car, bank accounts, etc.) probate is needed to change the ownership of those assets.  If a decedent dies with no assets titled in her name, there will typically be no need to probate her estate (most of the time a court is not needed to transfer ownership of a couch, TV, and DVD collection).  Also, there are various types of assets (life insurance being the most common) that are able to transfer at death without the need of probate.

Cost to Probate an Estate

Like any legal matter involving attorneys and the court system, there is a cost associated with the probate of an estate.  However, the cost in Idaho to probate an estate is much more reasonable than in some other states.  For instance, in California an attorney representing the personal representative of an estate is compensated in an amount based on the total value of the estate.  Therefore, if a decedent’s estate is high-value, the cost to probate that estate will likewise be high.  This leaves many with the impression that probate is something to be avoided at all costs.

In Idaho, the fee you pay your attorney is not governed by statute, but is a contractual matter between you and the attorney.  Whether that fee structure is based on an hourly rate, or some other agreement, the attorney’s compensation will not be directly related to the value of the estate, although high value estates may naturally require more time and attention than a low-value estate.  Generally the cost to probate an estate in Idaho is very reasonable, especially when considering what is required to implement an estate plan to avoid probate, and the unfortunate reality that such plans often fail.

How Can a Trust Avoid Probate?

First it is important to know what a trust is.  Surprisingly, the IRS (of all possible sources) provides a simple and easy to follow definition of a trust: “a trust is a relationship in which one person holds title to property, subject to an obligation to keep or use the property for the benefit of another.”  The basic structure of a trust is that the legal interest and the beneficial interest of property is split, either between a single person acting in multiple capacities, or between multiple people acting in different capacities.  A simple example is this: John Hancock owns a home, which is titled in his name as an individual.  When John dies, that home remains titled in the name of John Hancock until a probate is initiated, at which time the title of the home will be transferred to his estate and then ultimately in some other name, depending on what is done with the home.  This all requires a probate, which requires hiring and paying an attorney and cost costs.  Alternatively, if John had established a trust, say the “John Hancock Living Trust,” John could have given that home to the Trust for the benefit of himself, he could have acted as Trustee of the Trust during his life time, and also designated who should act as his successor Trustee when he dies, and directed what should be done with that house when he dies.  Upon the death of John, the Successor Trustee could simply do with the house what John directed, without needing to probate the estate and involve the court and the expense associated with that process.

Generally speaking, creating a trust is more expensive than drafting a will or just letting the State decided what to do with your things.  But, done right, a trust can avoid the need to probate an estate.  However, all too often probate is still required even if a trust has been established.  To continue with the example above, imagine that some years after John purchased the starter home mentioned above, his earning potential exponentially increased and John began collecting very expensive cars.  As John begins purchasing these cars he forgets to purchase them with assets of his Trust and also forgets to have them titled in the name of the Trust.  If John passes away with the same home (title is held by the Trust) and numerous expensive cars titled in his name personally, the result will be the need to probate the estate to deal with the cars, even though there was a trust established intended to avoid probate.  This may sound unlikely, but it can easily happen.

A Trust Should Have a Purpose

A trust can be beneficial in many different circumstances.  There are numerous trust structures to minimize tax liability.  There are trusts to care for individuals with disabilities receiving public support and assistance that otherwise may become ineligible if the same funds were given to them directly.  There are trusts designed to finance a child’s education.  There are trusts to support adult children who can’t be trusted to manage their own finances.  There are even trusts to ensure compliance with Federal gun regulations and provide flexibility in the ownership and use of those guns.  As long as there is a purpose for creating a trust, it can be very valuable and beneficial.  However, creating a trust just for the sake of creating a trust is probably not worth the expense and hassle.

Conclusion

If you have developed the resolve to meet with an attorney and discuss an estate plan, whether you’re leaning towards one side or another as far as a will vs trust, you have already taken a step in the right direction.  Our attorneys can help you determine what type of estate plan is right for you.

Self-Care and Divorce

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As a family law practitioner, my legal practice is centered in crisis.  Your crisis.  Professionally, I meet people during one of the worst times of their lives: their divorce.  Amicable or acrimonious, divorce is ranked among life’s most traumatic experiences.  Divorce is almost always an unhappy event, and at the very least it’s marked by disappointment and the loss of dreams and expectations.  It is a tumultuous, exhausting, and time consuming process.

There are so many parts to divorce. In addition to the legal obligations, there are assets to divide, debts to refinance, and custody schedules to develop.  It seems like there are so many other things that would be more important in a divorce – hiring lawyers, finding a new place to live, making sure you have enough money – but finding time for self-care is one of the most critical tasks you can accomplish during the chaos that accompanies divorce.

Self-care is a broad term that generally refers to the actions an individual might take in order to reach optimal physical and mental health.  Self-care is extremely personal, and can literally take a different form from one person to the next.  It can include activities like getting a haircut or massage, taking a trip, eating at a favorite restaurant, or it can be as simple as taking a shower. The bottom line is that self-care refers to making yourself a priority and following through with what you need in order to be your best self.

It’s easy to make excuses to avoid self-care, especially in times of overwhelming stress.  When your obligations are piled higher than Everest, finding reasons to skip self-care comes as naturally as blinking.  After all, how could you possibly think of yourself when there are so many other things that need to get done?  This means, unfortunately, that self-care in the context of divorce is almost nonexistent.

Self-care has a direct impact in your ability to make rational decisions in times of stress.  During times in which your self-care is lacking, you’re more likely to make decisions without thought as to how they may impact your future.

Divorce requires you to make difficult decisions during a time in which you feel your world is falling apart.  These decisions will impact the beginning of your life after divorce and need to be made with careful consideration.  The only way to ensure that you have both the physical and emotional strength to make these decisions is to engage in self-care.

Several misconceptions about self-care exist.  First, some operate under the notion that self-care is selfish.  This, however, could not be further from the truth.  Basic self-care includes good sleep, hygiene, a healthy diet, and exercise.  For some people, these three things are all it takes to ensure that they are operating at their optimal level.  It’s hard to argue that making sure you eat and sleep is selfish when it is literally required to simply exist.

Other people (I’m looking at you, parents) understand that self-care is important. Yet they place the task far lower on the priority list than it should rightfully be.  Parents are notorious for skipping self-care.  Every parent I have had the opportunity to meet struggles with how their children are coping with divorce.  They take extra steps to ensure that the children involved feel loved, safe, and comfortable.  However, much like on an airplane where you are instructed to first put on your own oxygen mask before helping anyone else, you must take care of yourself first.  Without making sure your own cup is full, you can’t expect yourself to be able to fill anyone else’s, including your children’s.

Further, as a parent, taking care of yourself and engaging in some simple self-care will help you to better see how your child is coping.  A lack of self-care can cause difficulty in processing information, making it harder to really see how your child is dealing with the impact of the divorce.  It seems counter-intuitive to attend to your own needs in order to better attend to someone else’s, but, again, you can’t give what you don’t have.

While engaging in self-care helps make the divorce process easier to manage, it doesn’t erase the fact that your life, as you know it, is forever changing.  Divorce is hard.  Taking the time, however, to make yourself a priority will ensure that you make it to the end of the divorce process in one piece and ready to start your new life.  Divorce is an end, but it is also, necessarily, a beginning.  It’s my job to get you to that new beginning.  It’s your job to make sure you get there still standing on two feet.

Easy Tips for Self-Care:

  1. Make sure you get enough sleep and are eating regular meals.  Try to exercise 2-3 times a week.
  2. Take the time to process the emotional parts of life.  Don’t try to ignore the impact your emotions are having on your day-to-day activities.
  3. Make time for play.  Just because you are going through a time of seriousness, doesn’t mean you don’t deserve to smile.  Find time to engage in an activity that doesn’t have a defined purpose or result, but that does make you happy.
  4. Be inspired.  Read something uplifting or listen to music that evokes reflection or introspection.
  5. Finally, spend some time with yourself and find out what self-care looks and feels like to you and then engage it as often as you need to.  There is no right or wrong self-care activity.