There are many misunderstandings about testamentary trusts and as a consequence people assume that they are too complex or useless processes before taking the time to learn about the benefits it provides.
Misunderstandings and their consequences are listed below:
- “A testamentary trust can be expensive.” However, if you compare the costs of a plan made in will to a plan made in trust, you yourself will find that the plan of trust will be less expensive in the long term for your family. It is recommended that you include the costs of probate for when you die, the costs of a conservatorship guardianship if you become disabled, and the costs of a custody guardianship if you leave your assets to a minor.
- “I have to relinquish control of my assets.” If you are your own trustee, then you can do anything with your estate like when you were without a trust, this means that you can buy, sell, change your trust plan or even cancel it, just to name a few. If you name another person as your trustee, you can replace him yourself at any time if you are not satisfied. You also decide when your loved ones will receive their inheritance. The great advantage of the testamentary trust is that you can maintain total control of your assets, while you live, if you become disabled or die.
- “I’m going to have to pay the fiduciary fees.” As long as you are your own trustee, you do not have to pay a fee for the estate administration. Successor trustees are entitled to a commission, but family members often do not have any. Professional counselors, like banks, charge a fiduciary fee for managing your assets under the trust plan.
- “A separate tax identification number and a separate tax return will be required for the trust.” As long as you live, you continue to use your own social security number and file your tax return in a normal way. If your trust plan continues after your death, you may need a separate tax identification number and tax returns in certain situations.
It’s easy to see how trusts have gained a better reputation in recent years. In general terms, the costs of probate and probate courts (conservatorships / guardianships of custody) apply a higher percentage in small estates than in larger estates. In addition to saving costs, most people choose a will trust because they want to avoid the inconvenience of future legal proceedings for their loved ones. If your will trust is properly prepared and the estate is properly titled, then there will be no probate court proceeding.
