Having a will vs. having a trust

Estate & Tax Attorney, Stefanie Lipson, shares advice on the differences between having a will and having a trust after your death
The Differences Between Having A WIll vs Having A Trust
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Having a will vs. having a trust

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So most times when you establish a living trust, you will also sign what is called a pour over will at the same time. So just because you have a trust does not make you do not have a will. It is just that your will has a different purpose now. What your will does is it says everything that is in my individual name at my death, I leave to the trustee of the trust. So what it has the effect of doing is pouring over into your trust any accidents that have been accidentally left in your individual name during your lifetime which the trustee does not already hold title to. Now there are certain assets that you never transfer to your living trust and they would not be transfered to your trust by a will either. For example, retirement plans, which have their own beneficiary designations. Life insurance is often not held in trust because it, too, has its own beneficiary designation. Those would not transfer to your trust under your pour over will. But for example, if you have a house and your house is titled in your individual name at your death, then your will would operate to move it to the trust after you have passed away.

Facts and Myths about Wills and Living Trusts

Will

Facts:

•    Inexpensive: Comparing the services of estate planning lawyers can help you find a better and cost-effective option to make a will

•    Applies to All: A will is suitable for all adults regardless of age or health status. 

•    Can Have Multiple Wills: Making a will is not only limited to doing it once in a lifetime. You can revise your will anytime.

Myths:

•    Time-Consuming: Creating a will is not time-consuming because a dedicated estate planning lawyer can help you create a comprehensive will with full supervision to avoid stress and delays. 

•    Complicated: While you need to carefully think about how to distribute your assets in a comprehensive will, placing advanced provisions can be simple by finding the right options.

Living Trust 

Facts:

•    Avoids Probate: A living trust enables you to transfer your assets to a trust, which makes the person the legal owner of all your assets (probate). It is preferred by many people because the court plays no further role in the event the grantor has been incapacitated or has passed away. 

•    Protects Minor Children: The trust holds the money if your beneficiary is a minor and distributes the money once your children reach the right age or as stated in the legal agreement.

•    Ensures Privacy: Your personal data, including the names of inheritors or beneficiaries and asset value, won't be placed on public records.

Myths:

•    Saves You from Taxes: A living trust won't save a grantor from income or estate taxes. The grantor retains the absolute ownership of all assets. All revenues generated from the living trust are counted in the income of the grantor subject to income tax. When the grantor dies, the assets are transferred to the grantor's estate after all federal estate taxes are incurred. 

•    Inexpensive: A living trust is expensive to create and maintain, which sometimes overruns the cost of a will. Legal fees are involved in building and transferring assets, with lawyer's fees running up into the thousands of dollars.


Estate & Tax Attorney, Stefanie Lipson, shares advice on the differences between having a will and having a trust after your death

Transcript

Expert Bio

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Stefanie Lipson

Estate & Tax Attorney

Stefanie J. Lipson is an attorney in the Family Wealth Planning Group of Greenberg, Glusker, Fields, Claman, & Machtinger, LLP.  Stefanie’s practice focuses on comprehensive estate planning for high net worth individuals, family business succession planning, probate and trust administration and the law of tax exempt organizations.  Stefanie counsels her clients with a holistic approach to wealth transfer solutions, structuring plans to meet a family’s individual needs while addressing the complex estate, gift and income tax implications of wealth transfer.  In addition, consistent with Stefanie’s belief that the most effective estate planning begins early, Stefanie has developed an estate planning program designed specifically to meet the planning needs of young families as they encounter common life events. 

Stefanie’s unique approach and application of Trust and Estate law has been well acknowledged by the legal community.  She served as a panelist at the 2010 Southern California Tax and Estate Planning Forum in a discussion involving multijurisdictional issues in estate planning and has authored publications for The Los Angeles Daily Journal and The Recorder.  Stefanie has been listed in Southern California Rising Stars each year since 2009.

Stefanie received her Bachelor of Arts in 2003 from University of California Los Angeles, graduating magna cum laude with the distinction of departmental honors and a member of Phi Beta Kappa.  Stefanie received her J.D. from the University of Southern California Law Center in 2006.  Following her graduation from USC, Stefanie clerked for the Honorable Fred Keiser, Jr. in the New Jersey Superior Court, Family Law Division.  During her time with the court, Stefanie also served as a court appointed mediator for small claims civil matters. 

In furtherance of her estate planning work, Stefanie is currently pursuing a Master of Laws in Taxation (LL.M.) from New York University School of Law.  Stefanie’s studies at NYU focus on estate, gift and income tax matters relating to wealth succession planning and family business ownership.

Stefanie lives in Los Angeles, with her husband Marc and their new son Noah, whom she regards as her greatest achievement.

Guardianship, Wills and Trusts
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