Friday, 15 November 2019

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Do I Need a Will, a Trust or Both?

Virginia Beach Law Group is here to answer all the questions you have about estate planning. This question is one that we receive all the time, especially with services like Legal Zoom pushing do-it-yourself wills and other firms pressing the need for everyone to have an expensive trust in lieu of or in addition to a will. The truth for most of us is simple: a will is sufficient for your estate planning needs. 

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Why You Probably Don’t Need a Trust

One of the main points the Trust proponents tout is that a trust avoids probate taxes.  They advertise that “a trust completely avoids probate.”  That is generally true.  However, the rebuttal is that the expense of having one of these outfits prepare a trust is WAY higher than the probate tax they purport to avoid.  The average prospective client will pay far more to have a trust estate created than his loved ones will pay in probate taxes.  Probate in Virginia is not the boogie monster that it is in other states, and creating a trust in Virginia costs thousands of dollars in order to avoid a probate tax in the hundreds of dollars (if that much).

Another truth is that whether you are the trustee of a trust, or the executor of a probate estate, or the administrator of an intestate estate, the job of being a trustee or executor or administrator are, to a layperson, a part-time job that looks the same no matter the formal legal designation of the role.  It is a labor of love, but nonetheless to a non-lawyer will “feel” the same.  Creating a trust does not relieve your successor trustee from that reality.

Reasons Why You MAY Need a Trust

  1. You are in a second (or subsequent) marriage and your family includes his kids, her kids and our kids.  The older the children, the more likely it will be that each respective set of step-kids will want their biological parents’ estate to come to them (and to exclude the step-parent’s kids).  (Happily, there is a less expensive way to resolve that matter, and it avoids the expense of a trust).
  2. You are going to leave an estate worth more than $5.2M* (and that figure may change according to the whim of our President and Congress).  You CAN shelter lots of money from estate taxes with a trust.
  3. You are leaving an estate to a disabled person for whom an inheritance of over $2,000.00 would disqualify the disabled person from continued eligibility to receive public benefit (i.e.: money).  THAT definitely calls for a trust.

 

A distant 4th reason to create a trust is if you own real estate in different states.  However, there are good (and cheaper) ways to deal with that situation versus creating a trust.

 

* Sometimes, one of these outfits selling Trusts will allow their prospective client believe that a Trust is the tool to avoid estate taxes.  In Virginia, the estate tax statutes are set up to mimic federal estate tax laws, in that if federal estate tax is due, then Virginia estate tax will be due.  Conversely, if no federal estate tax is due, then no Virginia estate tax will be due.  This year, estates smaller than $5.2 million do not pay estate tax.

A will and estate planning package drawn up by a licensed Virginia attorney provides most people with all the protection they need and all the end-of-life instructions their family may need. 

Our usual estate planning package at Virginia Beach Law Group consists of a Will, a Separate Written List (a very convenient way for a person to make adjustments and additions to his/her bequests without having to re-do the Will each time), a Durable General Power of Attorney and an Advance Medical Directive (end of life instructions and appointment of an agent to speak to the doctors if you are unable to do so).  My Powers of Attorney and Advance Medical Directive are both highly customized to take advantage of Virginia law (statutes) that our General Assembly has enacted for the purpose of enhancing those two important documents.

To discuss your estate plan, contact the estate planning lawyers at Virginia Beach Law Group. You can trust us to protect your legacy.