A Trust is a legal instrument that puts your assets into another legal entity, so to speak.

You open a trust account at a bank, put your money into it and designate a “trustee,” someone to control the assets. You can designate yourself with certain trusts.

Now, technically, the trust owns the assets.

There are several ways to pass on your assets after you die. The most common 3 are by will, by trust, or by intestate succession.

What happens when you die with a will

If you die with a will, your assets go to whoever you named in the will. The will enters probate. If you’re in CT there’s a 6-month waiting period for creditors. If you have a good will and if your lawyer is ontop of your probate and if you don’t have like 20 heirs, probate can move quickly. In MA, the period for creditors goes on for a year.

Because of the wait period, a lot of people opt out of wills and buy trusts, which can cut down on the wait period.

What happens if you die with a trust

If you die with all your assets in a trust, probate will be avoided. Your assets will go directly from the trust to the people named as beneficiaries.

what happens if you die without a will or a trust

If you die with no will or trust, your assets go through probate and state law dictates where they pass to, usually close family members. These laws are called “intestacy” laws, or the laws of intestate succession. Read the MA laws here, and the CT laws here.

MY TOP 5 concerns with trusts.

1. Just because a trust avoids probate doesn’t mean it avoids court
   
   There is a myth that probate is always bad. People hear horror stories about how complicated it is, how involved it is, etc.
   
   The truth is that probate can be messy, but it can also be very efficient. What’s more is that the probate court is the ideal forum to handle any potential disputes over your estate.
   
   People don’t think their kids or heirs will fight over assets, but a lot of times they do. With a properly drafted will, and an attentive attorney, probate functions as a way to handle disputes over your assets, which EVERYONE should plan for.
   
   Even if you have a trust, your estate STILL GOES THROUGH PROBATE. The trust won’t, but your death will be reviewed by the probate court. Everyone’s death does.
   
   So if you bought a trust for $5,000 you still have to go to probate for your death regardless, and pay a lawyer around $150 – $250/hr with costs totalling between $2,500 – $10,000 depending on the complexity of your estate.
   
   If there’s ever a dispute over your assets, the dispute will be settled in probate court infront of probate judges experienced in inheritance laws.
   
   What happens if there’s a dispute over a trust instead? Well, you can’t use the probate court anymore, now you have to go to superior court, where you’ll end up paying a lawyer to represent you and enter into potentially years long litigation that will go on way longer than probate would. Plus, since it’s a civil suit and not a probate matter, now you have to pay for things like depositions ($700/day), court costs (~$400 to file a complaint), and legal fees ($250/hr.)
   
   So on top of the $5,000 you paid for a trust, it may cost your kids $4,000 more for your probate and $10,000 more for trust litigation totaling nearly $20,000, plus the costs of paying the trustee and the costs of maintaining a trust during your life.
   
   That’s worst case scenario. Best case is that there are no disputes and your trust goes swimmingly. Your heirs get their assets immediately and everyone’s happy.
   
   The question is, do you want to roll the dice with these very expensive downfalls of a trust just to avoid a short wait period?
   
2. A trust isn’t as airtight as a properly drafted will
   
   Trusts are open to interpretation. A properly drafted will is presumed to be good in court and probate courts give a lot of credibility to them. A trust can be interpreted different ways by different beneficiaries. This can lead to expensive litigation.
   
3. Beneficiaries have to sue a bad trustee
   
   It’s nice when a trustee plays ball, but what happens if your trustee goes rogue or holds back distributions. Instead of being in probate court where the judge has the power to remove an executor or personal representative, now you have to enter into potentially years long litigation.
   
4. Costs
   
   Trusts cost substantially more than wills. For a lot of people, the cost doesn’t justify the benefit.
   
   If you’re spending $5,000 on a trust to avoid probate, just ask yourself like maybe that $5,000 would have been better spent as a giftin your will to little cousin timmy for his first car.
   
5. There are other ways to avoid probate, that are free
   
   Why spend all this money on a trust when you can make your assets avoid probate for free?
   
   If you have a bank account, put someone as a joint owner. If you have stocks, designate beneficiaries with Merill Lynch or Fidelity or whoever you use. You can designate beneficiaries on Robinhood, Venmo, etc… It is literally a free way to avoid probate. You can also do this with some bank accounts.
   
   And, you can do it with your house by having a joint owner too.
   

IN CONCLUSION

I’m not saying all trusts are bad. But if you’ve been pitched a trust by an attorney and you’re a little off put by the price, give yourself a chance to consider the risks and benefits.

Sometimes trusts work great, sometimes they don’t.

Also, there are legitimate reasons to have a trust. If you have a million dollars and want it divied out to your children over the years, then you need a trust. A will cannot do that.

But if you want a trust just to avoid probate or “make things easier”, there are other ways to do it which will save you money.

If you have any quetsions email me at dresslerjake@gmail.com

or call me at 207 550 5604

I practice law in CT and MA