Over the years, many people have told me, at an early stage in our initial meeting: “I need a simple will,” or sometimes, “I just need a simple will.” I have proceeded on the assumption, usually proven correct, that they had no idea what a simple will does or does not do, and that their statement translates to “I’m not going to pay a lot for this muffler!” So I would usually ignore the statement, and go on to my questions about their concerns.
But I sometimes wonder if our relationship would have gotten off to a better start if I had been more direct in my response. The conversation might have gone something like this.
“I need a simple will.”
“That’s really unlikely”
“Huh?”
“Well, unless you are playing scavenger hunt, and your list of things to collect includes a simple will, you probably don’t need a simple will. But let me ask you a few questions to make sure. How do you feel about probate?”
“Not so good. I had an aunt whose estate went through probate, and it was pretty awful.”
“If you were to become mentally incapacitated, would you want some control over who was in charge of your affairs, how the money was spent, and how you were taken care of?
“You bet.”
“When you leave property to your kids, would you like that money to be protected in case they get sued, or go through a divorce?
“Absolutely.”
“Well then, you don’t need a simple will. What you need is a revocable living trust.”
Time out. Note that I have not yet asked how much money is involved, or raised the specter of estate taxes. People often have the mistaken idea that the trust v. will question is a matter of how much money they have. The reality is that the benefits of trusts are most important in smaller estates. For example, is it more important to protect a child’s inheritance when the amount received is $200,000 or $200 Million? If you think about it, it is easy to see that a $300,000 judgment is a drop in the bucket in one case, and a disaster in the other. And why should only the super wealthy have the ability to control what happens to them if dementia strikes?
If I had determined that a married couple had total assets – including value of the house, and face value of all insurance policies – of more than $1Million, then the Massachusetts estate tax would be an issue, and there would be all the more reason for an RLT. For business owners, or for couples with total assets of over $2 Million, the trust is clearly the better way to proceed. Still I have found that even some people with significant assets think that they just need a simple will. It seems to be more a matter of lack of information than of net worth. But let’s continue with our conversation from where we took the time out.
“Well then, you don’t need a simple will. What you need is a revocable living trust.”
“How much will that cost?”
“Probably more than you want to pay. But now at least we are having a conversation about the real issue — not what you need, but what the cost will be. So let’s have that conversation.”