Transfer on Death vs. Wills vs. Living Trusts

Benefits and limitations exist with different methods of transferring assets within estate plans.  Included among the most common methods of asset transfer are Transfer on Death (“TOD”) designations, Wills, and Living Trusts.  In consultation with an estate planning attorney, you should carefully consider your circumstances and goals in determining the best approach.  Many factors must be considered, such as privacy concerns, tax implications, the degree of asset protection, and costs.  The chart below seeks to identify some of the key distinctions among these transfer methodologies.

TODWillsLiving Trusts
Typically avoids Probate Court

Potentially avoids delays in distributions or transfers

Does NOT take effect until death

NO incapacity planning

NO tax planning

NO asset protection

NO creditor protection
May minimize estate taxes

Possible asset protection for children (from lawsuits, divorce, creditors)

Does NOT take effect until death

NO incapacity planning

Requires Probate Court

Attorney costs and court fees to Probate

Delays in distributions until Probate completed

Requires inventory and valuation of all assets

Public disclosure of inventories and values in Probate Court

Public notice to creditors 

Easier to challenge and contest
Takes effect immediately

Avoids Probate Court (delays, expenses)

Maximum privacy

Can address out of state property

Incapacity planning

May minimize estate taxes

Asset and creditor protection available

Potential protection of assets upon remarriage

Options for property use and purchase

Avoids family conflict

Difficult to contest

More front-end costs

Need to retitle assets

Takes time to design for preferences and instructions for incapacity 

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