Pros, cons and differences between a Trust and a Will
Irina Yadgarova, Michael Levitis
Michael Levitis 00:00
Hey everybody, this is Michael Levitis from JurisQ.com, a legal network and I am bringing back. Irina Yadgarova, a Medicaid and estates attorney. Hi Irina. Welcome back. Thank you for your time.
Irina Yadgarova 00:18
Hello, how are you?
Michael Levitis 00:19
Very good. Thank you. Last time we spoke, you did an excellent job explaining what you do, how to
qualify for Medicaid. But still some questions remain some more basic issues that I want to get into.
You know, a lot of people get confused when they hear a wil,l a trust. What is the difference between
them? If you have a trust do you need a will? If you have a will do you need a trust? What’s easier to
deal with when unfortunately, somebody passes away? What’s the easiest form to get the inheritance
through which mechanism? A will? A trust?
Irina Yadgarova 00:58
Yes, those are excellent questions. I get asked that all the time. And they are very different a trust and a
will, any trusts will actually avoid what you will have to go through with a will. So whether or not you
have a will, there is a court process that the state has to go through before your beneficiaries inherit
anything. So if there is a will, that process is called probate and the surrogates court, if you don’t have a
will, it’s administration and the surrogates court. So a basic impetus for doing a will even though you
still have to go through the court process is you get to decide where your property goes when you die.
This state has a statute. So if you don’t say it in this written instrument, the will the state decides who
inherits. And it goes in order of your nearest kin. And each state has a different statute. So for example,
in New York, the nearest relatives if you’re married, your spouse, and if you have children, your spouse
gets the first $50,000 plus one half of your estate, and the children get the rest and equal shares. If you
don’t have children, your spouse gets everything. If you’re not married, and you have children, your
children get an equal share. So if you have no children, your parents, so then the statute goes in levels
of succession, who is your nearest kin, so if you have children, for example, but you don’t want them to inherit equally, let’s say you have a house or an account, or any asset that is just titled in your name will
have to go through this court process. So in your will, you can say, I don’t want, you know, one of my
children to get anything, I don’t have a good relationship with him, I want the others to inherit, you
know, in either equal shares or whatever disposition you want. Or if you want to give some to charity, or
a friend, no one, you know, then the statue will operate unless you have a will. So that in itself is a
great motivation to have a will if you don’t want the state to decide the disposition of your property.
Michael Levitis 02:53
But that process that sounds lengthy and could be expensive.
Irina Yadgarova 02:58
So probate is a little bit better, right? It’s a step up from the administration in terms of length and cost.
And I’ll explain that. So you’re not avoiding a court process here. Unfortunately, the probate process is
taking, depending on the county, I’m saying I think you’re looking at for my experience in various
counties an average of about six months, at least. And this is like a very optimistic view. For example,
in Kings County, the petitions literally sit there for months and months before the surrogate judge gets
to look at them. Why? It’s not because they’re lazy or incompetent is because there’s such a backlog, not
just because of COVID. So pre COVID, there was still you’re looking at minimum six months time, post
COVID. Of course, there’s still been this pent up delay. So now they’re kind of getting back up to speed.
But even then there’s one here, one judge, one surrogate for every county, and for every person whose
estate has to be administered or guardianship, you have one judge, they have their clerks, but it’s a
very, very busy docket.
Michael Levitis 04:03
So if your loved one passed away, unfortunately, and you have that to deal with you were expecting
counting on this inheritance, you may have to wait six months and longer.
Irina Yadgarova 04:17
Because probates and administrations most of the time they have some sort of kinks. They’re not as
simple as you think. Because you have to set you have to notify and cite the nearest kin, even in a will.
There’s no privacy there. So if there is a minor Oh, my goodness, they have to appoint a guardian ad
litem of a minor beneficiary and these things take years years. So I’m literally saying optimistic six
Michael Levitis 04:41
Irina, sometimes, I believe, your sibling or somebody else can contest. What’s happening in that case?
Irina Yadgarova 04:49
Yeah. That’s why they’re given the right to be cited. Yes.
Michael Levitis 04:53
It could be a whole litigation that could take years to decide.
Irina Yadgarova 04:58
That example that I gave a little bit early. Do you want to disinherit your son and the will? Well guess
what? That son is gonna get note he has to get notice of that will and a copy. And if he’s not happy if he
thinks mom was under duress or had dementia at the time she signed, and he’s gonna be contesting it,
he has another copy of some other instrument. So a trust avoids all of these. Avoiding Probate is one advantage
of doing a trust, of course, and the cost because you mentioned, you know, definitely, it’s expensive, it’s
very expensive. So, for the attorneys fees, you’re looking at thousands of dollars, the court fee is based on
the value of the estate, the highest court fee for any estate, a half a million or over is $1,250. You’re
looking at a court fee, okay? A lawyer’s fee. And I’ve seen attorneys who do charge percentages of the
estate, I’ve seen 3% 6%.
Michael Levitis 05:50
it’s like a trustee, right?
Irina Yadgarova 05:53
The attorney who does the probate who they aren’t sometimes they charge percent of the estate, I’ve seen it on multiple occasions. So they’e, you know, apparently, I guess it’s something that would be
upheld in a challenge of attorneys fees, they do sometimes charge a percentage of the estate value. So
that very hefty if you’re looking at your rental property is worth at least a million dollars in many areas in
New York, so three to six are just to pay the lawyer to deal with the probate.
Michael Levitis 06:22
And what about a trustee? Don’t you need a trustee as well?
Irina Yadgarova 06:25
An executor? Yes, whoever who is going to administer they marshal all the assets and distribute them
to the beneficiaries that you will point them in your will, which again, is another advantage you get?
Yes, they administer exact they have fees, administrators and executives have a statutory rate of fees,
which you can circumvent in the Will you could do more or less depending on what you want. There’s also a percentage schedule.
Michael Levitis 06:51
Yes. Okay. Very good now, but if you create a trust ahead of time, and I know your office does that, can
you explain a little bit how that works, and how that makes the process more painless.
Irina Yadgarova 07:07
Okay, so I think it’s very important to understand that the only assets that are going to pass through a
will are those that are titled in your name. So any asset that you properly transfer into a trust is no
longer titled in your name, and will not go through that court process of probate or administration, that
will have nothing to do with it. So when you have a trust, it’s important not just to have a blank
instrument that trust, you have to transfer either the account that you want to pass through the trust and
to the name of it, or the real property, whatever assets you want to pass pursuant to the trust, you have
to retitle in the name of the trust. That way, those assets will not go through any court process, they will
pass automatically. Post your passing. So that’s a huge savings and time and cost and headache and privacy. That’s a very important concern. Of course, a long time in practice, the more I see all these
complications with probate processes.
Michael Levitis 08:05
That’s an interesting point that you don’t think about. Right? Yeah, yeah, especially in this day and age.
We talked in our prior videos, how through a trust, you can qualify for Medicaid. Right. So certainly, you
can save lots of money for your medical expenses.
Irina Yadgarova 08:24
Yes, trusts can have so many advantages that wills do not trust can function in the form of Medicaid
eligibility. Trust can function similarly to get you asset protection. And trust can also help you avoid or
minimize estate taxes, depending on your net worth, which may be a very large concern. So trust are
vehicles that we use, in many instances, they may not be appropriate for everyone. I just want to also
mention something super important because we’re talking about the complexity of probate. Probate is
even more cumbersome and very difficult when you have properties and multiple jurisdictions. Why?
Because if you live if you’re living in New York, and you have property in New York, but you have
property as well in Florida, and you know, Pennsylvania, right, so many people have properties and
multiple jurisdictions, even a vacation home, right, but you’re gonna need to do ancillary probate or if
you didn’t have a real ancillary administer your attorney. Yes. That gets very costly. Multiple
jurisdiction always triggers for me do a trust in order to avoid those, you know, and have all the right
trust sometimes, again, depending on the nature of the property, if it’s just a bank account, this is
probably the most useful advice that I can give everyone and it won’t cost you a penny -appoint a
beneficiary, a transfer on death beneficiary on your bank account, because instead you don’t need to
do a trust for a bank account. It will be similar to a life insurance or retirement account. Name a
beneficiary that way the account doesn’t have to go through any court process, you don’t need a trust for it. There’s many
other reasons you may consider doing a trust for those properties. But if your sole concern is avoidance
of probate, for many assets, you can accomplish that without having to do a trust just by retitling and
adding a beneficiary designation to even a checking account.
Michael Levitis 10:20
Irina, you know, my biggest takeaway here, after I heard you explain, but all the complexities about
what happens when somebody passes away, you think you find peace? No. There’s more headache.
Irina Yadgarova 10:38
Your, well, you know, your nearest kin, your loved ones would have the rest of the headings planning
beneficial for them.
Michael Levitis 10:45
That’s what I was getting at that it sounds like you have to go to an attorney who is knowledgeable who
does just this trust and estates, retirement planning. And take all your assets, take everything you have
bank accounts, houses, accounts, businesses. Think about all your relationships, about all your kids,
legitimate and illegitimate. Think about your wives, your ex wives, your future wives, and you have to
have somebody like Irina Yadgarova to map it out for you. All in, in different documents, instruments,
says when you pass on your cane, have a peace of mind and make it easy for them to move on.
Irina Yadgarova 11:36
Absolutely. Couldn’t agree more.
Michael Levitis 11:39
Irina, thank you so much. This was very informative, of course, what you heard here today. That’s just
general advice Irina gave for you a broad landscape. If you want specific consultation on your specific
situation, call the number on the bottom of the screen. Go early, don’t delay. Everybody. Thank you
very much. Thank you everyone for your time.
Irina Yadgarova 12:08
Thank you, Mike.
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