Do you need a will or do you need a revocable living trust? It’s common for clients to think they need a trust until a lawyer educates them. Often, a will suffices.
As an estate planning attorney and a probate attorney, I do not push for a trust unless it is necessary. In attending a Trust and Estate Planning attorney meeting addressing wills and trusts, led by attorney Jennifer Spitz, I was surprised but reassured that the other estate planning attorneys in Colorado agree that often a will is the right document and a revocable living trust is not necessary.
The following are 13 things to consider in deciding if a will is sufficient for you. For sure, ask an attorney before making a decision. These are technical documents with major impacts, so you want to make the right choice.
1. As a general rule, wills are easier, cheaper and simpler to understand. Trusts are more time-consuming and expensive, more work.
2. There are ongoing responsibilities with trusts. You must fund the trust. You also have to put the house in a trust and then get the trust into the insurance and refinance mortgage. There are other aspects of a trust that need updating as well.
3. A lot of amendments are harder to do with a trust.
4. Probate is not terrible in Colorado – unlike states like California where probate can be a nightmare. Overall, a revocable living trust is usually more expensive on the front end than probate itself will be on the back end.
5. It is a lot of work to fund the trust with all the assets. You need to put all the assets – house, car, accounts, etc. – into the trust to fund the trust. If all the assets are not in the trust, you may end up in probate even if you have one.
6. Colorado probate law was updated in 1973 and Trust Code in 2019 so there is not as much history of the law with trusts as with wills. This may be something in favor of having a will.
7. Some people think trusts are more private, but that is only true some of the time. It is true that another attorney can pull up probate with the courts but it is not well-circulated public information overall. On the other hand, someone who is a beneficiary of a trust might be able to request an accounting of that trust once it is in effect so it is not always private.
8. If you already have a trust, it makes sense to just update it. A Reinstatement of Trust may make sense. Also, remember if you have a trust and get divorced, you need to do a Revocation of Trust to revoke the joint trust.
9. If you have property in more than one state, then you do probably need a revocable living trust to avoid two probates.
10. A revocable living trust is handy if you want a professional or corporate trustee (like a bank) to step in to manage someone’s money. The reason is that corporate trustees will not necessarily serve under a power or attorney. For example, if you want a bank as trustee.
11. If someone has a lot of beneficiaries and it is very detailed what they want to do, it is easier just to have a trust and then you do not have to repeat all the beneficiaries in all the other documents like the IRA, 410(k), Roth, investments, accounts, etc. It may make sense in that scenario to make the trust a beneficiary.
12. A springing trust is affordable and makes sense if you have minor children or grandchildren. This does not have to be funded as is necessary with a revocable springing trust.
13. If you are among the wealthiest of the wealthy, you may need an irrevocable trust to avoid estate and gift taxes. Colorado does not have estate and gift taxes. Federal estate gift tax limits are several million dollars and usually increase every year.
At Andersen Law PC, we try to get our clients where they want to be and not necessarily hard selling them on anything. We cannot assume why you want a trust. We need to ask and explain that there are a lot of different types of trusts and reasons for trust. We need to have a client conversation to understand what you want. Call or text my cell at 303-808-4794 or email me beth@andersenlawpc.com or call the office at 720-922-3880 to have a FREE conversation as to whether you need a trust or just a will.
