PRIMARY TESTAMENTARY INSTRUMENT

In developing your Life Plan, you will have to decide if it is to your advantage to use a Will or a Trust as your Primary Testamentary Instrument (the instrument that governs the transfer of the bulk of your legacy to your heirs). It is important to choose the Primary Testamentary Instrument that best suits your present and anticipated needs and desirers.

COMPARING A WILL TO A LIVING TRUST

Privacy. Every Will is subject to the Probate Process. Because Probate Courts are public courts, the business transacted in the Probate Court is a matter of public record. Therefore, a Will (or other document filed with a Probate Court) is open to inspection by anyone who cares to examine it. In contrast, when you hold your assets in a Living Trust, the distribution of assets to beneficiaries is private.

Probate Cost & Delays. The Probate Process is costly and can result in substantial delay in the transfer of your legacy to your heirs. When you hold assets in a Living Trust, you will avoid the Probate Process. Your Successor Trustee will have the legal authority to begin managing your estate immediately without court intervention.

Disability. A Will does not hold title to property and is not legally operative until death. There is no provision for asset distribution to you in the event of your disability. When your assets are held in a Living Trust, your successor Trustee will have the legal authority to manage your business or personal affairs in the event that you are temporarily or permanently disabled.

Will Contest. A Will is subject to Will contests, disputes over the construction and validity of your Will. There are explicit statutory procedures for contesting a Will that are well known and easy to understand and follow. Consequently, Will Contests are regular occurrences in Probate Court. On the other hand, a properly drafted and implemented Living Trust is more difficult to overturn and challenges to them seldom occur. As a result, a Living Trust can discourage disputes and Will Contests.

ADVANTAGES OF WILLS

Simplicity. A simple Will can be an effective Estate Planning tool for individuals with modest estates, provided the estate is uncomplicated and the Will is uncontested.

Revocable. A Will is not legally operative until death. Accordingly, a Will can be revoked or amended during your lifetime without complication.

ADVANTAGES OF A LIVING TRUST

Provide Lifetime Control. Essentially, a Living Trust is a Trust created during your lifetime that, by its terms, gives you the power to amend or revoked the Trust. Further, you can act as both Trustee (holding legal title to your property) and Beneficiary (having beneficial use and enjoyment of the property) providing you with maximum lifetime control and benefit. After your lifetime, the trust assets can be distributed to your heirs or held by your successor Trustee in trust for your beneficiaries.

Provide Control After Your Lifetime. After your lifetime, you can instruct your successor Trustee to distribute your legacy directly to your heirs or continue managing your estate for their benefit. If you wish your legacy to continue, your successor Trustee will have the highest fiduciary duty to administer your estate in a manner you set forth in the Trust document.

Avoid the Expenses of Probate. Because the property held in a Living Trust is legally owned by the Trustee, it is not included in your Probate Estate. Therefore, the property in the Living Trust is not subject to the expenses associated with the settlement of your estate during the Probate Process.

Avoid the Delays of Probate. Because the property in a Living Trust is not subject to the Probate Process, the Trustee need not await the Probate of the Will, the expiration of the time for filing claims against the estate, and other waiting periods required in the Probate Process before distributing your estate to your beneficiaries.

Provide Your Heirs with Immediate Access to Your Estate. In most cases, the Trustee may begin distributing Trust property to your heirs as soon as practical.

Avoid the Need for Ancillary Probate. If you own property in another state, the necessity and expense of filing ancillary Probate proceedings in the other state can be avoided by transferring the property to a Living Trust during your lifetime. If you have real estate in several states, the savings in legal fees and expenses effected by a Living Trust can be considerable.

Maintains the Privacy of the Testamentary Process. The Probate Process is a public proceeding and testamentary gifts made under a Will are a matter of public record. Conversely, property held in and distributed under a Living Trust is not a matter of public record.

Discourages Disputes and Will Contests. There are explicit statutory procedures for contesting a Will that are well known and easy to understand and follow. Consequently, Wills are easy to contest and Will contests are regular occurrences in most Probate Courts. On the other hand, a properly drafted and implemented Living Trust is more difficult to overturn and challenges to them seldom occur.

Protect You in the Event of Disability. A Living Trust, accompanied by a Durable Power of Attorney if necessary, can be used to provide for your needs should you become mentally or physically disabled or otherwise become unable to manage your affairs late in life. The use of a Living Trust can help eliminate the necessity of Conservator proceedings should you become disabled.

Permit you to Observe a Trustee's Performance. By creating and funding a Living Trust and appointing another person or entity as the Trustee, you can observe the performance of both the Trust and the Trustee during your lifetime. This "trial run" will permit you to make knowledgeable judgments as to the advisability of the Trust and the suitability of the Trustee. If changes are needed, you can make them during your lifetime. This advantage of a Living Trust is particularly important if the Trust property includes a closely-held business, the operation of which you wish to be continued after your death.

Provide for Continuity of Management. By selecting the Trustee during your lifetime, you can provide for continuity of management of the trust property. By selecting an established Corporate Trustee, you can insure continuity of management during the lives of the beneficiaries of the Trust. This advantage is again particularly important if the Trust property includes a closely-held business, the operation of which you wish to be continued after your death.

Effective Tool for Minimizing Tax Liability. Transferring assets to a Living Trust does not remove assets from your Taxable Estate. Consequently, the income and capital gain attributable to property held in a Living Trust are taxable during your lifetime, regardless of whether the income is accumulated by the Trustee or distributed. However, a married couple can use a Living Trust to shield the couple's Applicable Exclusion from Federal Gift and Estate tax (see section on Minimizing Federal Gift and Estate Taxation).