Will or Trust
Will or Trust?
Customers* often ask why should I spend ten times more money to get a trust created? That's a great question, but we encourage you to have an open mind when you inquire about the difference between a will and a trust. On the one hand, when you come to a consultation session asking pointed question to validate your mindset, you will not learn much and your advisor and counselor will be disinclined to share with you information that would guide you to arrive at a better conclusion. On the other hand, when you come to a consultation session with an open mind--seeking to soak in information, then the conversation would be more fruitful. For example, did you know that a trust is also an asset protection plan? Probably not. You may even ask what is an asset protection plan? That is a great question to start a conversation!
Before we discuss what a fruitful dialogue look like, lets look at what a validation conversation look like.
Validation conversation
Customer: Isn't it true that if I execute a payable on death benefit for my bank account, then I don't need a will or a trust?
Attorney: Correct.
Customer: isn't it true that if I already have on the title of my house myself, my spouse, and my child, then I don't need a will or a trust because the house will automatically go to them?
Attorney: May be.
Customer: isn't it true that if I already have a will, then I don't need a trust, because my asset is really only one bank account, one house, one car?
Attorney: May be.
All of these questions are great questions, but they elicit responses to validate a pre-determined mindset. When the attorney in this scenario respond "may be" to some of the questions, the attorney isn't giving a scathing response, but it is truly a "may be" scenario. The customer in this hypothetical may interpret the "may be" responses from the attorney as the attorney not knowing enough, which is not quite the case. There are circumstances when attorneys who don't practice this area of law truly do not know the answer. There are, however, circumstances that warrant the "may be" response. See fruitful dialogue below.
Fruitful consultation dialogue
Customer: If I already have on the title of my house my name, my spouse's name, and my child, what legal matters should I consider that may prevent me from passing on my property to my spouse and my child per my wish?
Attorney: That's a great question. There are a number of matters to consider.
By holding the title to the house in your name, your spouse's name, and your child's name, you do not get the legal protection of tenants by the entirety. By holding title as you do now, you may hold it as joint tenants or tenants in common. Both of these can have legal implication when it comes to having a judgment attached while you are still living. The judgment may wipe out all of the equity in the property so that you would have nothing to pass on to the next generation.
A practical consideration to have is how will your spouse and your child handle the obligations of the property after your passing? Whose responsibility would it be to pay any outstanding mortgage, future taxes, insurance, required maintenances and repairs? How long would your spouse be able to live in the house? If your current spouse isn't the mother of your child, then these questions become more pronounced and these matters can give rise to legal disputes.
As illustrated, an open-ended question elicits a response that brings forth many points for your to consider. You may not know the rights protected by holding a property as tenants by the entirety. You may not know the differences between tenants by the entirety and joint tenants and tenants in common. You may not know what rights come with those ways in holding title. You may not know how a judgment can arise and how it could affect the equity in your house. You would have the opportunity to ask questions regarding these topics and many more when you have an open mind when coming to a consultation session.
Ultimately, on the one hand, when you plan ahead, plan correctly, and plan well, then your wishes will be captured and carried out. On the other hand, you are free to choose your own instruments and mechanisms without the benefit of advice from trained professional. The question to ponder is this: is it worth the risk to encounter legal matters that you are not aware of or may not consider because you are an expert in your field but you are not a legal expert?
Definition:
Customers: people who inquire about legal questions.
Clients: people who have established an attorney-client relationship.