John D. Erdevig, Attorney. Wills

Do I need a trust?

Yes, if: Say you want to enhance the life of your disabled adult child who is dependent on Supplemental Security Income (SSI). Likely receipt of Medicaid poses complex planning needs. If you or your spouse is a non-resident alien under IRS definitions it can expose an inheritance to federal estate tax. Otherwise, you would have to accumulate close to $5.45 million per individual before federal estate tax looms. It is now easier for a couple to each pass on their individual exemption amount to heirs ($10.9MM total), without the traditional "A and B Trusts." For a discussion of trusts in a will for the support of abled but still maturing young adult children, see ”Trust in will, for children.”

Probably not, if: Let’s say you have wage or salary income between $30,000 and $150,000, you own or rent singly or with a spouse, have saved $500,000 in a 401(k), and perhaps you have some other typical middle class assets amounting to less than $200,000. Then it is harder to justify the longer orientation, the added expense, and the lifetime paperwork burden involved in a living trust. Let’s make some other assumptions: Family structure is simple, conflict is minimal, and everyone is more or less healthy and stable. Also, you do not own real estate in a jurisdiction where the probate court is inefficient or the local bar has a reputation for overcharging.

There is always some possible or marginal advantage to a trust, say, to provide for relatively seamless continuity of management of assets by the next generation as an older client ages, and to systematically minimize, if not avoid probate settlement of a decedent's estate. But many of my clients are making a will, power of attorney and health care directive for the first or second time. They are busy, and want to budget their time and money. Procrastination is the rule when talking about death, disability and money. In the interests of ”getting it done,” we sometimes ”keep it simple,” while still serving the client’s basic legal needs.

Read more about trusts after experiencing the relief of having a simple estate plan in place. Some attorneys and financial planners start with the supposition that everyone both needs and wants a trust and a will, when a stand-alone will might be the more practical short-term solution.

Legal plan coverage
for simple estate planning documents

Most common legal plans offered as an employment benefit cover simple wills, individual or couple.

Testamentary trusts (a contingent trust within a will) guarding funds for the support of dependent children through young adulthood, are covered. Probate-avoidance living trusts are covered, but are generally not cost-effective nor practical for John’s client population. Non-trust methods of minimizing probate involvement, cost and delay will be discussed. Tax advice and tax-avoidance drafting are not covered, and tax-sensitive matters will be referred out.

Many employment-based legal plans cover financial Powers of Attorney, to delay or avoid the need to obtain a conservatorship to manage an incompetent’s estate. Powers can become effective immediately (e.g. to allow a spouse to manage one’s affairs while one is absent from the country), or upon certification of two doctors that one cannot manage one’s own financial affairs, due to a medical condition.

Many employment-based legal plans cover a health care power, known in Michigan as a Designation of Patient Advocate. They also frequently cover “Living Will” Guidelines - Advance Health Care Directives, including end-of-life and funeral instructions.

John Erdevig encourages everyone with a legal plan to contact its administrators to learn more about what coverage is available and opportunities to persue these legal services.