Who Doesn’t Need A Trust?

I am a trust based estate planning attorney.  That means for a variety of reasons, I believe that most clients are best served if the centerpiece of their estate plan is a trust.

However, that said, a friend who recommends my services to his clients recently complained that after extolling the virtues of trusts and my services to his clients, he discovered that I had not recommended a trust based estate plan.  He wondered aloud if I had wandered from the true path.

Because in 1995 Arizona was the first among, at last count, 12 states to create a beneficiary deed statute, you may pass your assets at your death without a Will or a Trust.  Using a combination of a beneficiary deed for each parcel of real property, transfer or payable on death (TOD or POD) designations for investment or bank accounts, and naming competent adults in your beneficiary designations for retirement accounts, life insurance policies, and annuity contracts, you can avoid both probate and a trust administration.  Using an affidavit for collection of personal property will allow motor vehicles to be transferred and other items such as jewelry and collectibles can be distributed among your heirs by agreement.

This plan can work well for you if the objects of your bounty are competent adults without spendthrift habits or creditor problems and, in the case of real estate transfers, if the several recipients will cooperate with each other.  The problem is that in many families more structure is necessary to handle interfamily affairs and personalities and in some cases lifetime protective trusts will benefit your family more than the simplicity of the “no trust” or “no probate” plan described above.

The plan takes some prior thought and regular periodic review if you acquire new assets or the characteristics of your intended recipients change, but all other things being equal, these arrangements with adequate financial and health care powers of attorney may be all you need to have a viable estate plan.  I encourage you to also have a Will that will be effective if necessary to address unforeseen circumstances or otherwise omitted assets, but in all likelihood, no probate proceeding will be required and the Will will not be used.

Of course if you don’t fit the typical profile or have additional concerns, then you will be better served by a good inter vivos trust as part of your plan and you’ll make my friend happy.