When it comes to deciding between setting up wills and trusts, there are some key differences between the two, as described by Thomas Fross, contributor to Forbes.com.
Trusts are more versatile and serve three purposes. The first is that they bypass probate, secondly they give you a larger exemption upon death for estate tax reasons and lastly, they allow you to control money from the grave. Wills on the other hand, don't bypass probate but are simply a ticket into probate and you tell your estate how you want it to be.
Regarding the late actor Phillip Seymour Hoffman, Fross says there has been a lot of talk with how his estate was set up and he's not sure if there's an existing trust, as this information is private, as compared to a will, which is public. Fross says that we do know that his will specified his ex-girlfriend, who's the children's mother, that she would receive money and he said how he wants the money distributed to this son. There's no legal requirement, however, that his significant other has to distribute this money to his son, Fross notes, adding that alternatively, a trust would legally bind her from following through on those terms.
A trust isn't appropriate when one doesn't have assets to pass along, Fross says, or that can be titled. Probate can be avoided by just titling the assets and naming a beneficiary on qualified assets. "Why would one go through the expense of probate when we can bypass probate altogether,?" Fross says.
Thomas Fross is a contributor to Forbes.com and more information on wills and trusts in the article he wrote can be found here. Fross spoke with Retirement News Today, providing online, on-demand retirement news video content. Retirement News Today is a featured network of Sequence Media Group.