BY DR. LOUIS ALPERT
Ombudsman
The inspiration for writing this article may be traced back more than 20 years ago to 1998 when this Ombudsman was a mathematics professor at the City University of New York(CUNY) and attended a dinner meeting with his colleagues held at a Charlie Brown’s restaurant. We were delighted to be served by a young waitress at that time, who upon hearing that we were all from CUNY, announced that she was a student in the CUNY law school who intended to specialize in Estate Law and was paying her way through the CUNY law school by serving as a waitress.
Fast Forward to 2019- and Ombudsman Alert attended an estate planning seminar hosted by the Ettinger Law Firm, and conducted by attorney Jessica Kiley, who I was surprised to realize was the very same individual who served as my waitress two decades ago! When I recently contacted Jessica to review some of the pros and cons of a Will versus a Living Trust, she presented me with the following facts:
As an alternative to a will, many individuals may find a Revocable Living Trust preferable if they fit into any of the categories described in the list below. To begin with, a revocable living trust is created during the grantor’s lifetime to hold all their assets during that person’s life. Reasons why a trust may be necessary:
1) Disinheritance – Since wills can be contested while revocable living trusts cannot be contested.
2) Probate issues – Property in multiple states transferred in a will must be probated in each such state at substantial cost to the estate, while the same properties transferred in a revocable living trust will not be subject to probate.
3)Planning for Disabled Child or Grandchild – Parents or Grandparents of a special needs child or adult child should leave inherited assets in a special needs trust, to avoid disqualification from receiving government benefits such as SSI and medicaid.
4) Planning for a Spendthrift Child – Many successful individuals have children who can not handle their own finances, many times making extremely poor financial decisions. In these cases it may be necessary to create a trust for that child which would continue until a stated age, or time period for that child’s lifetime if need be. The trustee would have the discretion and could use the money in the trust for the beneficiary’s heath, education, maintenance and support. The trust could help him or her start a business or purchase a house.
5) Second Marriage Planning – In second marriage planning, we often recommend that a professional act as a co-Trustee on the death of the first spouse. Having a co-Trustee after the death of of the first spouse can prevent the other spouse from taking all of the assets and diverting them to their own children or to be influenced, sometimes, unduly, by other parties.
6) Estate Tax Planning – A common tool in tax planning is a Credit Shelter Trust, which is designed to save the personal estate tax exemption of each spouse while allowing the surviving spouse to have use of the assets of the deceased spouse during the remainder of their lifetime. For couples with taxable estates, such trusts are commonly used today to allow the surviving spouse greater flexibility in optimizing tax savings.
In conclusion, OMBUDSMAN ALERT advises all of our readers who contemplate choosing between a Will and a Living Trust to seriously consider the points made in this article, and by all means to first consult with an Estate Law attorney of your choice to determine your final choice between a Will and a Living Trust.
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