Will or Trust? A few reasons to consider a Trust*

*This is the attorney’s personal blog. Nothing written herein constitutes legal advice. Access to this blog article doesn’t create attorney client relationship and should not be relied upon without consulting a competent attorney, who will be able to explain the exceptions and the nuances that would apply in each individual situation.

When a testator dies and leaves a will, the heirs go through the estate probate in a Surrogate's Court. When assets are held in a trust and a testator dies, the trustee can distribute the assets without going through probate[1].

This matters because probating a will is a lengthy court proceeding. Trust administration doesn’t involve courts: to be precise, the assets that a testator “puts” in a trust will be managed for the heirs and/or distributed outright to the heirs outside of court.[2][3]

With a will, the person you name as executor must petition the Surrogate’s Court to be formally appointed before he or she has full authority to act on behalf of the estate. That means, in every instance, preparing and filing extensive paperwork, paying the court filing fee of $1250[4], notifying all the interested parties, responding to numerous additional requests from the court clerk, waiting for the papers to reach a busy judge for the final sign off and issuance of the decree.

Attorney’s fees are an additional expense unless the heirs are able to navigate this process on their own.

The process can also take time. New York City Surrogate’s Courts handle a very large volume of probate and estate matters, and delays often occur. Even an uncontested probate proceeding may take months before an executor receives full authority to administer the estate. Complicated estates can take considerably longer. Following the COVID pandemic, wait times in Brooklyn and Queens stretched into years.

Once appointed, the executor still has work to do: identifying and collecting assets, paying debts and expenses, handling tax matters, maintaining records, keeping track and complying with court deadlines and additional requests, and ultimately distributing the estate according to the instructions left in the will.

Another concern: Will that has entered probate is open to the public. The will and many related court filings are uploaded into the public database. Nothing is redacted. Anyone searching the court records will learn who the beneficiaries are, their addresses, who is serving as executor, who received what and other information about the estate.

Trust works differently. When assets are held in a properly funded trust that a testator created during his or her lifetime, they can generally be administered by a trustee without first obtaining authority from the Surrogate’s Court.[5] After testator’s death, the "successor" trustee will step in and begin managing the trust assets, paying appropriate expenses, selling or managing property when necessary, and distributing the assets according to the instructions included in the trust document.[6]

The trust itself also generally remains a private document rather than becoming part of a public probate file.[7]

Fees: If you choose a will-based estate plan, expect a fee for a properly executed will that ensures its validity. When it’s time for the will to be probated, the heirs will pay court fees and will engage a probate attorney to get them through the intricacies of the probate process.

If you choose a living trust, the upfront cost is generally somewhat higher because the trust must not only be drafted but also properly funded. That involves retitling real estate, bank and brokerage accounts, and other appropriate assets into the trust. Your heirs will not incur court fees and more substantial probate attorney’s fees.

My practice offers flat-fee estate-planning arrangements that can include will preparation that ensures its full validity or preparation of a straightforward living trust and, importantly, assistance with transferring appropriate assets into the trust. I also handle probate matters. I will provide referrals/recommendations when an estate requires more specialized high-net-worth planning.

 

 

 

[1] It is crucial that the trust document is properly drafted and the trust is properly set up

[2] The trust can be pulled into probate in certain circumstances. A competent attorney will advise accordingly

[3] If there are “forgotten” assets that were not included in the trust, they will be subject to probate but it will keep the trust document outside of court. My practice recommends a

[4] Current fee for the majority of estates

[5] Consult an attorney to make sure that the trust is not pulled into probate, such as, for example, when a testator fully disinherits his or her spouse and the spouse brings the appropriate cause of action

[6] As always, consult an attorney for when it's not the case

[7]As always, consult an attorney to make sure the trust is not going to be pulled into probate