Why would a trust be better?

[OceanSun]

Jurisdiction

Florida

My parents each had a will until a few years ago, when, according to my mother, they changed it so that in their wills, after they are both gone, everything goes into a trust, then me as the executor divides everything up between myself and my siblings. Also, there are now two grandchildren in the picture that weren't around when the wills were made. The previous wills just stated that everything was evenly divided between myself and my siblings. Now, the grandchildren each get a set amount, then the rest divided as before.

I'm trying to understand what the trust would do in this case, and why it would be better than what they had before. I've asked my mother, but she just says it's better, without any explanation. There's not current rifts in the family, though I know anything can happen. But nothing up to this point, and neither of my parents siblings are still alive, nor anyone else that should be able to lay any kind of claim to anything.

In the end, whatever it is, it is, but I'm trying to understand it.

 

[army judge]

I'm trying to understand what the trust would do in this case, and why it would be better than what they had before.

As long as your parents are living the trust doesn't exist, according to your recitation above.

You don't get to decide or determine anything.

If you are to administer the tryst upon the passing if both parents, you'll simply divvy up the contents of what is owned by your parents and placed into the trust.

Before you embark upon that duty, it is advisable to retain an attorney to oversee and direct your efforts. The attorney will be recompensed by the trust.

In the end, whatever it is, it is, but I'm trying to understand it.

When the parental units have passed on, the attorney you retain will reveal to you all that you need to know to dole out the assets. He or she will do so AFTER reviewing the trust documents.

 

[OceanSun]

None of that really answers m question. I understand that there is not trust until both have passed. My point is, in the old will, it stated everything gets divided up amongst the heirs. In the new will, it goes into a trust to then get divided up amongst the heirs. So, what is the advantage to adding the step of putting it in a trust before it gets divided?

 

[Tax Counsel]

My parents each had a will until a few years ago, when, according to my mother, they changed it so that in their wills, after they are both gone, everything goes into a trust, then me as the executor divides everything up between myself and my siblings.

I suspect that either your Mom doesn't fully understand the mechanics of the estate plan or that she didn't explain it very well to you. In Florida (and a lot of other states too) the most common estate plan you'll see is an inter vivos trust (what is commonly known as a living trust) that is set up and funded during the lifetime of your parents coupled with a pour over will that dumps any assets that somehow didn't make it into the trust during their lives into the trust after they died. That may well be the arrangement your parents set up.

Why do it that way? Four main reasons.

The first is that the assets placed in the trust during their lifetime do not go through probate in the courts. That generally makes the estate less costly to settle when they die and makes it possible to do distributions faster than would be possible with probate.

The second is that you can do things in a trust that you cannot do in a will. For example, gifts to minor children can be delayed and given to them once they are adults (e.g. age 18, 21, or even older if that's what your parents want) or restrict the use of the money they get to first fund, say, college expenses and then give them whatever is left after they graduate from college.

The third reason is that it is generally easier to change the trust than the will because a new will or amendment to a will requires two witnesses and that is not required with a trust.

Finally, the trust is more private than a will. When a will goes to probate, it becomes a public record that anyone who wishes may look at. The trust stays private unless the trust becomes a subject of litigation.

 

[zddoodah]

I'm trying to understand what the trust would do in this case, and why it would be better than what they had before.

Please don't take this the wrong way, but whether or why a trust plus pour-over will is "better" that just a will isn't anything with which you need to concern yourself. Your parents made that choice, and that's all that matters (even if they don't entirely understand the "why" of it).

As for what the trust will do, you wrote that "everything goes into a trust, then me [sic] as the executor divides everything up between myself and my siblings" (along with other provisions for grandchildren." I won't repeat what "Tax Counsel" already wrote, but you should understand that an executor is a person appointed by a court to administer a decedent's estate. Trusts have trustees, not executors, and courts are generally not involved in the administration of trusts. Assuming that the trust designates you as the successor trustee (after both of your parents have died or become incompetent), then, at that time, you'll need to understand your legal duties as trustee. In my opinion, administering even a simple trust of the sort that "Tax Counsel" described is not a good do-it-yourself project, and you will want to hire an attorney. The attorney's fees will be payable by the trust, so you won't have to pay out of pocket.

 

[Tax Counsel]

In my opinion, administering even a simple trust of the sort that "Tax Counsel" described is not a good do-it-yourself project, and you will want to hire an attorney. The attorney's fees will be payable by the trust, so you won't have to pay out of pocket.

I agree, and would add that generally you want to hire an attorney for administering a probate estate for the same reasons. There too the estate executor gets paid a fee from the estate (unless the executor waives the fee).