Revocable Living Trust or Will? Lou Reed Answers
I recently read an article in Forbes about Lou Reed’s estate plan. The gist of the article was an argument for using a revocable living trust (especially in New York) as opposed to a will for transferring and protecting assets.
If Lou Reed had used a revocable living trust, and transferred his assets into the trust during his life, then all of this information would have been kept private. No one would know how much he had, whom he left it to, or how much his executors were charging. That’s a key difference between wills and trusts. Wills have to pass through probate court to work, which is a public process. Trusts, when used the right way, avoid probate court entirely.
While most people don’t have to worry about the press leaking details of their financial worth, everyone should strive to avoid probate court. On top of being public, it’s also expensive, time-consuming, stressful, and more prone to family fighting. What if Reed’s sister felt she should get more than 25% of his publishing income? What if Reed’s mother claimed more money for her care? What if Reed’s wife wanted everything?
It’s much easier to file objections or challenges to a will in probate court, than to a trust which is administered privately, outside of probate court. Further, it’s much simpler for anyone to leave detailed instructions, with conditions, limitations, and suggestions, in a comprehensive trust document, rather than a will — even one that is 34 pages long. In fact, trusts can even help you when you are alive, but before you die, by addressing who and how your assets are managed if you are no longer able to do so. Wills can’t help with that.
These are powerful arguments assuming that you want to keep your will private (most of us don’t care) and your will does not do what you want it to do. For many of us, however, the differences are negligible considering the fact that probating a will in New York or New Jersey is less complicated that it might seem.
Nevertheless, if you go the revocable living trust route there are important points to keep in mind.
First, you have to re-title your assets in the name of the trust. For many, a trust sounds like a great thing until they realize there is a lot paperwork up front.
Second, there are no differences from a tax perspective. You will not save taxes using a revocable living trust.
If you keep these ideas in mind and really do want to avoid probate then create a revocable living trust – but either way might lead you to take a walk on the wild side.
On that note –
If you’re looking for estate planning attorneys in Union County or Hunterdon County, New Jersey, please email Alec Borenstein at firstname.lastname@example.org.