Some decisions with short-term benefits have more costs in the long term. On the other hand, some things that are more expensive in the short-term can save you more money in the bigger picture of things.
When it comes to estate planning, your focus shouldn’t just be on what will keep your costs as low as possible when you create the plan, but also on what will keep costs low in the future when your executor must follow through with your instructions. While it may be faster and possibly slightly cheaper to create an estate plan consisting only of a will, you might actually save more money in the long run by creating a trust.
Assets in a trust don’t have to go through probate in most cases
People use trusts in their estate plan for many reasons. Sometimes they want to retain control over how their heirs use the resources they leave behind. Other times, they want to put money aside for a charity. Tax concerns, debt and even a need for Medicaid can also motivate people to create a trust.
One of the many benefits of a trust is the fact that the trust becomes the owner of the assets used to fund it. Given that the assets belong to the trust and not to an individual, they aren’t subject to probate oversight during estate administration. That can save a significant amount of money. Experts estimate that probate can reduce the value of an estate by as much as 5 to 7%.
A trust can be worth well more than what you put into it. Discussing your situation with an attorney can give you an idea of if the trust would work for you and how to best structure it to maximize its benefits.