Assets in the trust avoid guardianship on incapacity. There are many circumstances where powers of attorney cannot do the same thing.
A trust imposes a high duty of care on a Trustee and eliminates third party (such as a Bank) liability. Powers of attorney cannot do the same thing because though they impose a high duty of care on the Agent, they do not eliminate the third party liability and that third party that has the liability must accept the power of attorney. Many frequently will not allow just any power of attorney form but will insist on their own form to be used.
A Trust is easily changed should you desire to do so.
A Trust easily moves with you from state to state because it is valid in every state and can require that it be interpreted by the state where it was written. Wills are designed to be valid and interpreted in the state they are drafted in. Wills are interpreted by the death state, which may not be the same state in which it was drafted. Powers of attorney are also state specific.
A trust can define disability or incapacity to avoid any court involvement. A trust can have a private incapacity panel that allows incapacity to be determined by persons of your choice instead of through the courts and without requiring two doctors to sign. Wills do nothing for someone who is incapacitated.
A Trust provides one planning document full of instructions for your care upon your incapacity. Powers of attorney do not provide those instructions and are frequently not accepted. Wills cannot work until your death, and thus can’t help you on incapacity. Powers of attorney terminate upon death. A Trust continues after death to carry out your instructions privately.
A trust provides control of your assets for your family in case of your disappearance or absence instead of your family perhaps having to wait for several years to have you declared dead to access assets and information. Without this ability, upon disappearance, it can take years before one can be declared legally dead, leaving the family unable to access assets and accomplish things such as repairing or selling the family home. Meanwhile, powers of attorney can’t work without evidence that the person is alive. Remember the LINDA E fishing boat that disappeared off of Port Washington in December of 1998.
Upon your incapacity, a trust avoids the expenses and fees associated with guardianship on all assets owned by your trust. Guardianship usually costs thousands of dollars and puts a judge, creditors, and everyone but your family in charge of your affairs.
A Trust provides one planning document full of instructions for the care of your loved ones upon your incapacity. A power of attorney created for you cannot provide those instructions for your loved ones, and wills cannot work until your death.
A Trust provides one planning document full of instructions for the care of your loved ones upon your death. Wills do not work until probated. Probates are more expensive and can take weeks, months, and in some cases years if there are problems in probate.
A trust provides continuity in the handling of your affairs by efficiently and privately transferring your property to your loved ones after death. Probate takes more time, expense, is open to the public and isn’t always smooth.
A trust acts as a receptacle to own or be the beneficiary of assets. To work as designed it must be funded properly as well, that is assets put into the trust. Wills do not work until probated and to accomplish the same thing, assets must be distributed to the estate. That can take weeks, months, and in some cases years if there are problems in probate.
Trusts make the best beneficiary of life insurance policies because if an individual is named, and they are incapacitated or dead, then the proceeds go through either guardianship or probate. If the estate is named, then the proceeds are subject to the debts of both the decedent and the beneficiary. Otherwise, life insurance proceeds are not subject to the debts of either.
A trust allows life insurance to be paid to the trust so it passes according to your distribution and control plan. Life insurance left directly to beneficiaries can be subject to divorces, lawsuits, and creditors, or it may undo your overall planning due to lack of coordination with your distribution plan.
A trust avoids the expenses and fees associated with probate on all assets owned by your trust. Probate can be expensive and time consuming. It absolutely provides a forum for disgruntled heirs to bring disputes, often without them paying legal fees on the front end. Probate benefits your creditors, and requires notice to them. But the worst thing it does is to put a judge, disgruntled heirs, creditors, alleged creditors, and everyone but your family in charge of your affairs.
A trust ensures your family’s privacy following your incapacity or death on all assets owned by your trust. Guardianship and probate are public and anyone can obtain the information in those files.
A trust can allow a Trust Protector to modify or update the estate plan if there are changes in laws or circumstances that make it necessary or beneficial without spending the money to go to court and without having to depend on a judge’s approval. Wills cannot be modified but may be interpreted by a judge.
A trust can allow each spouse to control the disposition of property so that in case of remarriage of the surviving spouse, the children are not accidentally disinherited. Assets passing by right of survivorship or direct beneficiary designations can create the problem of children being accidentally disinherited.
A trust can eliminate disputes between the surviving spouse and children from a prior marriage over the control or distribution of assets. Wills require probate, which creates a forum to bring disputes.
A trust allows parents with minor children to choose to have children raised according to their values. Wills cannot do this if the court is expected to enforce religious values instead of your Trustee enforcing those values.
A trust can encourage children or grandchildren to get a post-high school education, set educational standards for a post-high school education so beneficiaries don’t become professional students or trust babies. Wills can do this, but because of probate, not as efficiently as a trust. Rarely is that issue even considered in will-based planning. Will-based plans are often not funded so the will does not control distribution of all the assets and often the estate tax planning doesn’t work in a will as completely as it does in a trust.
A trust can create trusts for your loved ones that are free from the supervision of the probate court. Wills can allow protective trusts, but require probate, which automatically involves the court and makes it easier for predators and creditors to bring claims against your loved ones.
A trust can provide asset protection for children, including protection from failed marriages, creditors, addictions or serious health matters.Wills can allow protective trusts, but require probate, which automatically involves the court and makes it easier for predators and creditors to bring claims against your loved ones.
A trust can provide for a beneficiary with special needs so they can remain eligible for a public benefit program. Wills can allow protective trusts, but require probate, which automatically involves the court and makes it easier for governmental agencies to bring claims against your loved ones.
A trust an provide that upon the death of a beneficiary, assets will not be subject to estate tax again. This is called a dynasty plan.