Wills Versus Trusts Per Brian O’Connell Trust Lawyer West Palm Beach

Brian O'Connell, Estate Trial Lawyer of West Palm Beach

September 21, 2020

Wills Versus Trusts

Wills and trusts generally represent the two most common tools used for estate planning from what Brian O’Connell has seen in practice. And Brian would be well aware, having practiced law for decades in Florida. Both essentially help distribute estate holdings to beneficiaries. However, they are dramatically different in how these tools are implemented by the courts after the fact. And that can impact what is left for beneficiaries like your spouse and children dramatically, according to a Brian O’Connell trust lawyer Palm Beach perspective.


Understanding the Mechanical Difference


A last will is a legal document that spells out a person’s last wishes for their estate and where their property should go, according to Brian O’Connell. It can deal with all assets the person owns, from a home to cash in the bank to artwork and more. A trust, on the other hand, becomes a legal entity created the day it is executed, i.e. put into action. Per Brian, a trust can either be permanent from when it is created and unchangeable (irrevocable trust) or it can be modified over time (living trust). However, the trust owns the assets moved into it by title where the will does not. Brian O’Connell points out this key difference is huge.


Legal Ramifications


Once the will gets to court, as seen in all the cases Brian O’Connell has handled, it has to go through probate. The court through its administrator reviews the will, which can take a long time and be challenged by anyone, even non-family. A trust, on the other hand, has no process in court. As soon as the grantor (creator) of the trust dies, the assets in it transfer to the beneficiary named. Because the assets were moved during life, the court has not general reach in probate for those assets. They were put into the trust and then delivered to the beneficiary automatically. The key feature, Brian O’Connell highlights, makes the trust far more advantageous, especially if one doesn’t want their estate in probate.


Cost Difference


With a will in probate, the legal service involved representing the family and executor gets a percentage of the total estate, which can be costly. With a trust, the grantor pays the trust fee upfront. There are no fees after the fact after a person dies. The up-front fee can be a bit of a charge because it requires a custom setup with an attorney, but that can still be substantially less than the probate fee on the entire estate, notes Brian O’Connell.


Tax Exposure


With a will, a spouse is protected by marital-related laws allowing the spousal partner immediate access to assets in a will and estate. The spouse also avoids inheritance tax up to a sizable dollar limit. However, children and beneficiaries have to wait for the probate process and get taxed on the receipt of assets and their market value at the time of receiving them. With a trust, the assets are transferred immediately to the beneficiary on execution. The tax exposure is on the income earned on the assets while they were in the trust, not the full value of the asset. Again, it is a sizable difference in impact versus inheritance tax, notes Brian O’Connell.


Anyone thinking about serious estate planning should definitely compare both paths, according to Brian O’Connell trust litigation lawyer West Palm Beach, but many will argue the trust makes the most sense for a larger estate.