Trusts are not subject to probate and, if properly drafted, can include tax-planning clauses that may reduce the overall impact on estate taxes. The cost savings are advantageous, but their extent varies depending on the state's probate fees and costs and the size of the decedent's estate. Estate taxes only affect relatively large estates, valued in the millions of dollars. Additionally, while probate does cost money, those considering a trust should weigh the savings against the costs associated with creating it.
A well-drafted estate plan is crucial to the smooth, efficient distribution of a deceased's property and assets. Two common estate plans are wills and trusts. Each has its nuances and advantages. A trust is not always more advantageous than a will, but knowing the potential benefits may help a person choose an appropriate estate plan.
Real Estate Advantages
Trusts are particularly helpful for people who own land in different states. If such a person died with a will, the personal representative could need to open ancillary probate proceedings in each state where the decedent owns property before that property can effectively pass to the heirs. Additional probate proceedings increase time and costs. A trust can avoid additional probate proceedings.
Probate is a court proceeding and the findings are generally public domain. In contrast, trust terms are usually private. Some people want to keep their financial affairs private. A trust provides privacy.
Trusts may offer other advantages over a probated will. They may help the decedent avoid complicated probate laws and procedures in some states. Additionally, a trust may allow contingency plans -- if a person becomes incapacitated, for example, the terms of his trust can spring into effect; a will is only operative upon the decedent's death. Whether a person needs a will or a trust depends on her situation.