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Do I Really Need a Will and/or a Trust?

Friday afternoons are not associated with serious activity. If we are at work, we may be one of the few who haven’t taken off early, but we are most likely thinking about the weekend while keeping one eye on the clock. We may be planning to meet up for a TGIF gathering at a favorite spot, or if we live in Hawaii we may be looking forward to Pau Hana, “finished work,” to tell stories and drink Ono beer. But joining others in some meeting room to listen to a lawyer talk about wills and trusts would not be top of mind… but here we were, 15 Villagers and 7 community members. When the presenter asked how many had a will and/or a trust, only four or five including yours truly raised our hands. Go figure!

This was my third such presentation and third attempt at answering the question: “Do I really need a will and/or a trust?” Answering that question this time was Amanda Bunn, JD from University of San Diego School Of Law and Associate Attorney at Lagerlof, practicing in the areas of Estate Planning, Tax, and Trust Administration. Amanda provided an overview of essential aspects of developing a well-rounded estate plan to protect assets, minimize taxes, and ensure wishes are fulfilled. Key topics are presented below.

Taxes and Minimizing Costs
In 2026, the federal estate tax exemption is $15 million, with amounts above that taxed at 40%. Proper planning can reduce estate taxes for spouses and future generations by utilizing lifetime exemption gifts, annual exclusion gifts and marital deductions. Generation-skipping transfer tax (GST) also applies at 40% beyond a $15 million exemption when transferring assets to grandchildren or younger generations. 

Estate planning costs vary depending on complexity. Wills and revocable trusts provide flexibility and can be updated; however, irrevocable trusts and gifts are permanent.

Probate Process and Avoidance
Probate is a court-supervised process validating wills, appointing executors, managing assets, paying debts, and finally transferring assets to beneficiaries. Probate typically lasts at least a year and costs about 1–2% of the estate value. Certain assets, including living trust assets, jointly held property, and beneficiary-designated accounts, can avoid probate. However, probate avoidance does not eliminate estate taxes or all costs.

Living Trusts
A living trust is a legal entity created to hold assets during one’s life and distribute them after death without probate. The trust owner can also serve as trustee, retaining control and flexibility, including amendments or revocations. For a living trust to be effective in avoiding probate, assets must be retitled into the trust's name. This enables smooth management if the owner becomes incapacitated and allows trust administration to remain private.

Appointment of Trustees, Executors, and Guardians
The choice of executors, trustees, and guardians is critical. Selected individuals should be trustworthy and competent persons. For minors, outright inheritance is generally discouraged; structured trust distributions allow protection and gradual transfer of control aligned with beneficiaries’ maturity and needs.

Planning for Incapacity
Without proper documents, incapacity can lead to court-appointed conservatorships involving public oversight, which is best avoided with documents such as durable powers of attorney, living wills, and advance health care directives. 

Life Insurance
Life insurance provides liquidity to cover estate taxes and expenses and can replace lost income.  Using an Irrevocable Life Insurance Trust (ILIT) removes life insurance proceeds from the taxable estate.

Retirement Plans and Beneficiary Considerations
Retirement accounts like IRAs may be subject to income and estate taxes. Naming appropriate beneficiaries is key, especially for non-spouse individuals, to optimize tax outcomes and ensure intended inheritance.

Planning for Pets
Owners can plan for pet care by naming caregivers, leaving funds, or establishing pet trusts.

Charitable Giving and Legacy Planning
Charitable giving can be structured through wills, trusts, beneficiary designations, donor-advised funds, or private foundations to support meaningful causes during and after life.

In sum, comprehensive estate planning integrates flexible tools (wills, trusts, powers of attorney) with tax-efficient strategies, appointment of reliable fiduciaries, and provisions for incapacity and charitable goals to secure both financial and personal wishes for current and future generations. This structured approach minimizes taxes, avoids delays and costs of probate, protects vulnerable beneficiaries, and preserves privacy. 

Villager Valli Cowan’s overall assessment says it best: “I really thought that the presentation was very informative and the speaker really seemed to be concerned with answering questions from our group.” In typical Villager fashion, there were a lot of questions and that included Valli and I. We plan to follow up with Amanda for a free consultation.