The Hidden Costs of Not Having a Trust
You have a Will. So your family can simply follow it when you die, right?
Not necessarily.
A Last Will and Testament provides instructions for what should happen to your property after your death. But a Will does not, by itself, keep your estate out of probate.
If you own assets individually at your death and those assets do not have a beneficiary designation, joint owner with survivorship rights, trust ownership, or another method of transferring automatically, your family may still need to open a probate estate to carry out the instructions in your Will.
And probate comes with costs that many families do not anticipate.
What Can Probate Cost in Illinois?
Let's start with the costs you can see.
In Cook County, the current filing fee to open a probate estate is $479.
Illinois also requires certain creditor notices to be published in a newspaper once a week for three consecutive weeks. Publication costs vary depending on the newspaper.
Then there are attorney fees.
Illinois does not establish a fixed percentage or statutory fee schedule for probate attorneys. Instead, the attorney representing the estate is entitled to reasonable compensation based on the work required.
For even a relatively straightforward, uncontested estate, attorney fees can amount to several thousand dollars.
There can be other expenses too, including:
Bond premiums
Appraisals
Accounting services
Tax preparation
Real estate expenses
Additional court filings
Costs associated with locating assets or records
Creditor disputes
Disagreements among beneficiaries
The representative or executor of the estate may also be entitled to reasonable compensation for the work involved in administering the estate.
What begins as a fairly simple estate can therefore become more expensive than a family expected.
The Other Cost: Time
Probate is not just about money.
It also takes time.
Under Illinois law, the estate representative generally must publish notice to creditors, and the deadline stated in that notice must be at least six months after the first publication.
That means even a routine estate cannot necessarily be wrapped up immediately.
There are assets to identify, creditors to address, documents to file, property to manage and, eventually, distributions to make.
For families who need access to money to maintain a home, pay expenses, or handle other financial obligations, waiting through the probate process can create additional stress.
Doesn't Having a Will Avoid Probate?
This is one of the most common estate planning misconceptions.
A Will does not avoid probate.
Your Will tells the probate court and your executor what you want to happen with assets that pass through your estate.
A properly created and funded revocable living trust works differently.
When assets have been transferred into your trust during your lifetime, those assets are generally administered according to the trust rather than through the probate estate.
That distinction can make a significant difference for your family.
What Are the Benefits of a Trust?
Avoiding probate is only one potential benefit.
Depending on your situation, a properly structured and funded trust can provide:
Faster Access to Assets
Because trust-owned assets generally do not have to go through probate before they can be administered, your successor trustee may be able to begin managing them much sooner.
Greater Privacy
Probate is a court proceeding, and many of the documents involved become part of the public record.
A trust generally does not need to be filed with the court simply because you have died, which can keep more of your family's financial affairs private.
More Control Over an Inheritance
A trust can do much more than say who receives your property.
You can establish instructions about when and how beneficiaries receive their inheritance.
For example, assets could remain in trust for a child rather than being distributed all at once. You might also provide additional safeguards for a beneficiary who is young, financially inexperienced, or simply not ready to manage a substantial inheritance.
Planning for Incapacity
A revocable living trust is not only about what happens after death.
It can also establish who will manage trust assets if you become unable to manage them yourself.
That can provide continuity during your lifetime, not just after it.
Signing a Trust Is Not Enough
There is an important catch.
Your trust has to be funded.
Creating a trust does not automatically move your property into it.
Depending on the asset, funding a trust may involve changing ownership, updating titles, coordinating accounts, or taking other steps so that the trust actually controls the property.
If you sign a trust but leave significant assets in your individual name without another probate-avoidance mechanism, those assets may still end up going through probate.
This is why estate planning is about more than creating documents.
Your assets, beneficiary designations, ownership and estate planning documents all need to work together.
Does Everyone Need a Trust?
No.
A trust is not automatically the right estate planning tool for every person or every family.
Some assets already transfer outside probate through beneficiary designations or other forms of ownership. Some smaller estates may also qualify for simplified procedures rather than a formal probate administration.
The question is not simply, "Do I need a trust?"
The better questions are:
What do I own? How is it titled? Who should receive it? And what will my family actually have to do when I am gone?
Those answers can help determine whether a trust should be part of your estate plan.
Look Beyond the Cost of Creating an Estate Plan
It is easy to compare the upfront cost of creating a trust with the cost of preparing a simpler estate plan.
But that does not tell the whole story.
You also have to consider what the plan could cost your family later in court fees, attorney fees, administration expenses, time and inconvenience.
A thoughtful estate plan looks at both sides of that equation.
Wondering whether a trust makes sense for your family?
Contact the David Frank Law Group to schedule an estate planning consultation. We can review how your assets are currently owned and help you determine whether a trust should be part of your plan.
