Reason #1 - DTT v simple Will
I started this series in response to the repeated suggestions that people should “just use a simple will or a fixed trust” instead of a discretionary testamentary trust. They are not the same thing. While the public discussion about discretionary testamentary trusts has died down, my insistence that they are suitable for all types of testators (and not just rich ones who want tax advantages) remains.
The value on paper
Problem #1 with just a simple will - values, you are very much stuck with the paper value of everything. The value of an asset is an ever moving, ever changing thing and being stuck with the value on paper, so a formal valuation and a point in time (being the time of death) can be problematic.
I must admit I rambled through a few problems in this first video, which you can watch on Instagram by following this link. The problem I intended to emphasise was that in a fixed trust will and a simple will you are very much stuck with the paper value. The real estate is worth what an agent tells you it is worth, and what it is worth now, not what it might be worth in a year when the change to the zoning laws is formalised. Alternatively, you might think it is worth less right now because it isn't even safe enough to enter without a waiver, and you are happy to agree to transfer it to your brother for less and let it be his problem. It doesn't matter, the paper value is what you have to deal with in a simple will or a fixed trust.
Discretionary trust means the Trustees (who are the primary beneficiaries) decide the value. They can agree between them that two assets are equal value, regardless of what a third party valuer says, and each agree to take the asset that they would prefer. If the beneficiaries agree that is equal value, why should someone else get to come in and say no?
Are you ready to get started on your Estate Plan?
Are you ready to get started with your Estate Plan? I don’t believe in doing “just a Will” because I don’t believe that death is simple. If you want to know more about doing an Estate Plan with me then you can check that out on my “Services” page by clicking on the link in the menu above, or the button below.
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