Exploring the estate benefits of using both a will and a trust

A recent story illustrates that even celebrities or those with high-asset estates may have misconceptions about estate planning.

In this case, the late actor Phillip Seymour Hoffman apparently regarded trusts as a potentially disruptive influence on his three children. According to the late actor’s attorney, Hoffman repeatedly rejected advice to create trusts. Instead, Hoffman executed a will in which he reportedly left his entire estate to his girlfriend, who is also the mother of his three children.

As an attorney who focuses on estate planning knows, a will can be helpful as part of a multi-faceted approach to retirement, end-of-life and estate planning. On its own, however, a will may not be able to accomplish all of an individual's intentions. One of the most glaring limitations is that a will must go through probate. That process is seldom quick, often entailing an inventory of the estate’s assets and verification of many other administrative matters.

Although Hoffman stated that he did not want his children to become trust-fund beneficiaries, an approach that included both a will and various trust instruments might have provided more flexibility. For example, a spendthrift trust can impose limitations on a beneficiary’s access to the trust principal. It can also work nicely with a will: Since trust assets are generally specifically named, a will can provide for how any subsequently acquired assets should be handled.

For anyone with questions about how to address unique inheritance directives or family situations, an attorney that focuses on wills, trusts and estates can be a valuable resource. An attorney can suggest a variety of legal instruments that may help to minimize taxes while accomplishing a grantor’s wishes.

Source: CNN, “Philip Seymour Hoffman didn't want 'trust fund kids,' court docs show,” Alan Duke, July 22, 2014