Coronavirus has proven to be a major threat to our overall well-being. And with all the trouble it’s caused to families, now could be a good time to review your estate planning needs. It’s something that many people may be overlooking, either accidentally or on purpose, as this economic and health crisis plays out. Nevertheless, knowing that your assets are going where you intend them can bring you peace of mind amid the chaos.
One of the most fundamental choices you can make as you’re thinking about how to pass your assets on to heirs is whether you hold assets in a Revocable Living Trust or more simply give them via a Will. Both approaches have advantages, though Trusts can provide some additional benefits.
REVOCABLE LIVING TRUST vs. WILL: HOW TO CHOOSE IN THE CORONAVIRUS ERA.
1. A Will can be set up faster and cheaper.
A Will can be set up faster than a trust, making a difference in urgent circumstances, whereas with a Living Trust, you still need to take care of the funding aspect, which requires you to retitle any assets that you want protected by the Trust. It may be impossible or at least very difficult to retitle your financial accounts during the pandemic, especially if you have to go to banks or other institutions in person. And if you can’t move the assets to the trust, you’ve lost all its benefit. Without the proper titling of assets, you still have to go through probate and you just spent all that money and time creating the Trust.
However, one downside is that Wills have to be signed and witnessed in person, although some states have temporarily allowed video conferencing to comply with social distancing and limit the spread of the coronavirus.
2. A Trust is better for an incapacitated person.
A Living Trust offers a key benefit if someone becomes incapacitated due to illness. To that end, Trusts are usually accompanied by two other legal documents: a medical advance directive and a durable power of attorney. These documents allow people to make medical decisions on your behalf and manage your finances if you become incapacitated.
If you were to become disabled by a complication due to COVID-19, a Revocable Trust could be advantageous over a Will. Your successor trustee can step in and handle your assets while you’re alive but unable to do so, and this isn’t an option with a Will.
3. Trusts may be better with backed-up courts.
With coronavirus stifling the court system, and therefore probate, the process of settling a Will could take much longer than it already requires. So a Trust may be a better solution because it allows you to avoid probate.
BOTTOM LINE. While it can be easy to put off issues such as estate planning because of the sensitive emotional issues involved, not to mention the family drama that can be stirred up, it’s imperative that you have a plan in place, especially given the sudden effects of the coronavirus. Always remember that someone has to have the mental capacity to create many legal documents, and waiting too long can be problematic. And given the complex nature of estate planning, you need a lawyer for all but the simplest operations if you want to ensure that your assets are distributed according to your wishes. It might be expensive, but remember, with an estate plan, you can buy expensive and cry once or buy cheap and cry forever. Isn’t that often true with many things in life?
Give us a call at 253.858.5434 to talk about your and your family's estate planning needs.