Ep. 2: A Will vs. A Trust. Which Do You Need?
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In the second episode of Repair the Roof, Attorney Ted Gudorf explores the differences between wills and trusts. A will, he explains, is a legal document where you provide a set of instructions on how you want to handle your estate when you pass away. It functions after your death and provides you with nothing before it. It only encompasses that which is in your name alone and guarantees that your estate will go through probate. Probate is a court-supervised process where wills are submitted, and it can be expensive and time-consuming. For his clients, Ted wants to ensure that probate court is removed from possible involvement.
There are a few ways to avoid a living probate. One is to set up more than one trust, so that your estate will not need to go through probate court in the event that you become disabled. This includes identifying a successor trustee. Instructions in a trust should be as specific as possible.
One difference between a will and a trust is the involvement of creditors. Assets that pass through a will are subject to claims of creditors, where trusts aren’t. A trust is private, and not available for public viewing, and is administered much faster as it doesn’t require the involvement of a judge. For will-based plans, one should anticipate a flat rate minimum fee of up to 5% of the probate estate, where trust administration is about 1%. A continuing trust, or dynasty trust, keeps the assets protected in the event the beneficiary gets divorced, gets sued, goes bankrupt, or they become disabled.
- Introduction (00:05)
- What is a will? (00:52)
- Probate court (01:56)
- Trusts (04:13)
- Successor trustees (05:09)
- Trusts v. wills (08:22)
- Continuing trusts (12:55)
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